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December 16, 2009

ONTARIO LEADS NORTH AMERICAN JURISDICTIONS IN ANNUAL IBM GLOBAL LOCATION TRENDS REPORT

The news is out! Ontario is the location of choice in North America for multinational firms looking to make themselves more competitive in the face of an economic environment where companies face "...a cloud of uncertainty about their prospects, with the financial system in severe difficulties..." according to IBM's Global Location Trends report, issued October 2009.

Seeking a safe harbour, where they could depend on a skilled, talented workforce backed by a plummeting marginal effective tax rate (METR) on new investments, foreign direct investors put their faith in Ontario, creating a North American-leading 7,000 new jobs in the province in 2008. This is the second year in a row that Ontario took the top spot for jobs created according to the IBM study.

In the Foreword to the report, Frank Kern, Sr. VP of IBM Global Business Services noted that "...the volatility of the last year has highlighted the importance of a region's resilience and adaptiveness." And Ontario has certainly met this challenge and signalled that it will continue to do so, leading with dramatic business tax cuts in many areas:

Capital taxes will be totally eliminated on July 1, 2010.

Ontario's corporate income tax (CIT) rates would drop from the current 14% (12% for manufacturing and processing) to 10% in 2013.

Once fully implemented, the METR on new capital investments (provincial and federal combined) will plummet from 32.8% in 2009 to 18.6% in 2010; then again to 17.3% in 2013 and to 16.2% in 2018.

Ontario's highly skilled workforce, proximity to the US market and an environment that fosters innovation remain driving forces behind decisions to investment here.

More than 62 percent of Ontario workers have post-secondary educations, which is a higher percentage than in any developed country.

A network of 20 universities and 24 colleges trains students in every field, from the skilled trades to the most advanced areas of science, engineering and business. Increasingly, Ontario's formidable education sector is focusing on green energy courses and programs.

There are 158 million consumers within a day's drive of Ontario. Sophisticated transportation and telecommunications networks support efficient supply chain management and product distribution to these consumers.

Every year, more than $12.5 billion in industrial and university-based R&D is performed in the province, pushing the boundaries of innovation across every industry.

This high level of research intensity is partially because we have state-of-the-art facilities and generous funding programs that have attracted and retained top international scientists, but also because we have tax incentive programs that help keep R&D costs low.

Canada's R&D tax incentive program is widely recognized as one of the most generous in the world. And in Ontario, we top-up that program with additional tax incentives such as the Ontario Business-Research Institute (OBRI) tax credit and the Ontario Innovation Tax Credit (OITC).

Our definition of R&D includes new product development, development of new or improved materials, and improvements to the manufacturing process with a broad range of costs that qualify for tax purposes.