According to Area Development magazine, one of the leading publications covering corporate site selection and relocation, Canada's corporate tax cuts and new investment programs are attracting attention from foreign investors in machinery, equipment and facilities.

Canada offers lowest corporate tax rates in the G7

Highly competitive corporate tax rates are still one of the main advantages bringing foreign direct investment to Canada. “According to numbers for 2015, Canada ranks as the second-lowest corporate income tax rate for OECD members,” states a corporate site selection expert from Area Development Magazine. They also point to a PwC-World Bank study that ranks Canada first among G7 countries for 'ease of tax payment'.

Canada's free trade and tariff-free zones

According to Area Development magazine, Canada's foreign investors will enjoy access to nearly 980 million consumers with a combined GDP of US$37 trillion –which is one half of the world's output of goods and services, report authors of the article. Furthermore, “through tax and tariff export-related programs, Canada provides benefits to businesses comparable to those found in foreign trade zones (FTZ) in other countries while having the advantages of not being site-specific.” In 2015, Canada became the first G20 country to offer a tariff-free zone for industrial manufacturers.

Canada offers faster write-off of eligible investments

In a move to support investment in machinery and equipment, Canada offers an accelerated rate of depreciation for faster write-offs. The accelerated capital cost allowance (CCA) accomplishes this by offering a rate of 50% on a declining balance basis for assets acquired between 2015 and 2026, compared to the usual 30%. As a result, KPMG predicts that CCA will reduce federal taxes for manufacturers in Canada by $1.1 billion between the periods of 2016-2017 and 2019-2020.

Canadian and Ontario government funding for R&D and business expansion

Area Development magazine also mentions Ontario's favourable climate for research and development as a key factor in drawing investment. A combination of federal and Ontario business grants and loans are available to businesses, along with an R&D tax incentive program that can reduce the after-tax cost of $100 in R&D spending to between $37 and $61.

Corporate site selection experts: Canada will continue to lead in manufacturing sector FDI

A 15% drop in Canada's currency has resulted in some proportionate manufacturing cost reductions. The availability of skilled labour and advantages in fiscal policy and taxation, along with the devaluation of its currency, strengthen predictions by Area Development magazine that Canada's share in foreign direct investment will continue to grow through 2015 and beyond.

Read the full article by Area Development Magazine

November 18, 2015

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