Canada
Company Formation
Canada is one of the most developed economies in the world, offering a highly stable political environment, a well-regulated financial system and strong legal protections for businesses. As a member of the G7, Canada has extensive trade relationships with countries around the world and provides access to both North American and international markets.
Canada is particularly attractive to businesses in sectors like technology, natural resources, financial services and e-commerce. Its favourable corporate tax rates and competitive business environment make it a top destination for international companies.
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Why Canada
- Canada is an ideal jurisdiction for company formation offering a world-class business environment, access to North American markets and a strong legal system.
- With a federal corporate tax rate of 15% and provincial rates ranging from 8% to 16%, it provides favorable tax conditions.
- Access to North American markets, including the US and Mexico, is facilitated through NAFTA/CUSMA.
- Canada’s transparent legal environment provides strong protections for businesses and investors while its highly skilled workforce excels in technology, engineering and finance.
- Start-ups benefit from R&D tax incentives, government grants, funding opportunities and a thriving tech ecosystem, making Canada a top choice for innovation-focused businesses.
Key Contacts
Alexia Panzavecchia
Claire Marie Calleja Zammit
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Key Information Overview
 | Types of Companies | Corporation (Inc.), Limited Liability Partnership (LLP), Branch |
 | Minimum Share Capital | No minimum share capital required |
 | Registered Office | Must have a registered office in Canada |
 | Shareholders & Directors | At least 1 shareholder, 1 director (25% of directors must be Canadian residents for federal companies) |
 | Bank Account | Must open a local Canadian bank account |
 | Tax Regime | 15% federal tax, provincial taxes vary (combined rate: 26% to 31%) |
 | Time to Complete Incorporation | 1-3 weeks |
 | Annual Maintenance Costs | Varies by company size; includes federal/provincial filing fees, compliance costs |
 | Audit Requirements | Mandatory for larger companies; exemptions for small businesses |
 | Market Access | Access to North American markets, extensive trade agreements worldwide |
 | Key Benefits | Strong economy, access to skilled labor, stable business environment |
 | Legal Framework | Based on common law |
 | Physical Presence Requirements | Registered office required; no physical presence otherwise required |
 | Corporate Governance Requirements | At least 1 director and 1 shareholder |
 | Language Requirements | English and French (depending on the province) |
 | Tax Residency Rules | Managed and controlled from Canada |
 | Required Documents | Articles of Incorporation, ID proof, registered office address |
 | Compliance & Reporting | Annual returns, financial statements, VAT/GST filings |
 | Employee and Payroll Requirements | Must comply with Canadian employment laws, including CPP and EI contributions |
Types of Companies
Canada offers several corporate structures designed to meet the needs of businesses, from small start-ups to large multinational corporations.
01
Corporation (C-Corp)
- The most common type of company in Canada, suitable for both small and large businesses. Provides limited liability protection for shareholders.
- Minimum share capital: No minimum capital requirement.
02
Limited Partnership (LP)
Offers limited liability protection to certain partners. Typically used for professional firms and joint ventures.
03
Branch of a Foreign Company
Allows foreign companies to establish a branch in Canada to operate as an extension of the parent company.
04
Sole Proprietorship
Suitable for individuals conducting business independently. This structure does not provide limited liability protection.
05
Special Purpose Vehicles (SPVs)
Canada’s robust legal and regulatory environment makes it an ideal jurisdiction for creating Special Purpose Vehicles (SPVs) for financial transactions, investment and asset management.
Holding Company
Canada’s holding company structure allows businesses to manage subsidiaries and assets efficiently. These companies benefit from tax treaties and legal protections under Canadian law.
Securitisation Vehicle
SPVs are commonly used in Canada for securitising financial assets. The country’s well-regulated financial system and access to international markets make it an attractive option for these vehicles.
Real Estate Investment Trusts (REITs)
Canada offers favourable tax treatment for REITs, making it a key jurisdiction for structuring real estate investments and asset management.
Investment Funds
Canada is known for its strong regulatory framework for investment funds, including mutual funds and private equity funds. These SPVs benefit from tax efficiency and access to global markets.
Start-Ups
Canada is one of the best countries in the world for start-ups, particularly in sectors like technology, artificial intelligence, fintech and renewable energy. The government provides a range of incentives and grants, alongside a supportive ecosystem for innovation and entrepreneurship.
Tax Incentives:
- Corporate Tax Rate: Canada has a competitive federal corporate tax rate of 15%, with provincial tax rates ranging between 8%-16%, depending on the location.
- Scientific Research and Experimental Development (SR&ED) Tax Incentive: This programme offers tax credits to companies engaging in research and development (R&D).
Government Grants and Support:
- Start-Up Visa Program: Provides foreign entrepreneurs with the opportunity to immigrate to Canada if they have the backing of a designated Canadian venture capital fund, angel investor, or business incubator.
- Industrial Research Assistance Program (IRAP): Offers financial support to start-ups engaging in innovation and technological development.
Business Support:
Incubators and Accelerators: Canada has a well-established network of incubators and accelerators providing mentorship, office space and access to venture capital.
Access to Markets:
NAFTA/CUSMA: Canada’s position within the North American trade agreement gives start-ups access to US and Mexican markets, allowing them to scale quickly across the continent.
Innovation-Friendly Environment:
Technology Hub: Canada has several technology hubs, such as Toronto, Vancouver and Montreal, that are globally recognised for their innovation in AI, fintech and software development.
A+
Grade A+: Highly Start-Up Friendly
Canada offers a world-class start-up environment, particularly for tech-driven businesses. With strong government support, access to funding and a skilled workforce, Canada is a prime location for entrepreneurs.
Benefits
Canada offers a wide range of benefits for companies looking to incorporate, from a strong legal framework to access to international markets and favourable tax conditions.
Favourable Corporate Tax Rates
Canada has a competitive corporate tax rate of 15% federally, with additional provincial tax rates varying between 8%-16%, making it an attractive location for businesses seeking tax efficiency.
Access to North American Markets
Through its membership in NAFTA/CUSMA, Canada provides businesses with access to both US and Mexican markets, allowing for free trade and the movement of goods and services across the continent.
Strong Legal System
Canada’s legal system is transparent and highly regulated, providing strong protections for businesses and investors.
Highly Skilled Workforce
Canada has a highly educated and diverse workforce, particularly in technology, finance and engineering, making it easy for businesses to find the talent they need.
Government Support for Innovation
Canada offers significant financial incentives for businesses engaged in research and development, making it an attractive jurisdiction for tech companies and innovators.
Requirements
To establish a company in Canada, several legal and administrative requirements must be met. Below are the key requirements for incorporating a company.
01
Shareholders
A minimum of one shareholder is required for corporations. Shareholders can be individuals or legal entities, with no restrictions on nationality or residency.
02
Directors
At least one director is required and at least 25% of the directors must be Canadian residents. However, in provinces like British Columbia, there is no requirement for directors to be Canadian residents.
03
Company Secretary
There is no mandatory requirement for a company secretary, though many companies choose to appoint one for administrative purposes.
04
Registered Office
Every company must have a registered office in Canada, which serves as the official address for legal correspondence.
05
Minimum Share Capital
There is no minimum share capital requirement for most companies in Canada, though some companies may choose to issue shares with a nominal value.
06
Bank Account
A corporate bank account must be opened in Canada, where the share capital will be deposited.
Mergers & Acquisitions
TAILORED SUPPORT to fast-track your market entry
Our Mergers & Acquisitions services are designed to assist clients in acquiring existing companies with pre-established licenses, streamlining the process of entering or expanding in key markets. These services are particularly relevant for investors seeking to fast-track their market entry while ensuring efficient and compliant solutions.
Identifying Suitable Businesses
We help clients locate companies that meet their specific goals, focusing on entities with strong operational histories and the required licenses.
Legal and Regulatory Assistance
Our experts guide clients through the unique legal and compliance frameworks of each market, ensuring a smooth acquisition process with minimal risk.
Valuation & Due Diligence
We conduct in-depth assessments of the target company’s financial and operational status, providing transparency and confidence in the acquisition.
Post-Acquisition Support
For clients who decide to divest, we offer comprehensive services to facilitate the sale of the company and transfer of licenses.
Frequently Asked Questions
What is the corporate tax rate in Canada?
Canada’s federal corporate tax rate is 15%, but provincial tax rates vary. The combined corporate tax rate across provinces typically ranges from 26% to 31%.
Are dividends subject to withholding tax in Canada?
Yes, dividends paid to non-residents are subject to a 25% withholding tax. This rate can be reduced under Canada’s extensive network of tax treaties.
What legal structures are available for businesses in Canada?
Common legal structures include Corporations (Inc.), Limited Liability Partnerships (LLP), and Sole Proprietorships. Corporations can be incorporated at either the federal or provincial level.
Do Canadian companies need to file audited financial statements?
Larger Canadian companies are required to file audited financial statements, while small companies may be exempt, depending on provincial regulations and the company’s structure.
What is the VAT/GST rate in Canada?
Canada imposes a Goods and Services Tax (GST) at a federal level of 5%, with some provinces applying additional Provincial Sales Tax (PST) or Harmonized Sales Tax (HST), which can bring the total VAT/GST rate to between 5% and 15%, depending on the province.
Are there residency requirements for directors in Canada?
Federally incorporated companies must have at least 25% of their directors be Canadian residents. Provincial residency requirements vary by jurisdiction.
Does Canada have double taxation treaties?
Yes, Canada has double taxation treaties with over 90 countries, helping businesses avoid being taxed in both jurisdictions.
What is the process for incorporating a company in Canada?
Incorporation involves filing the Articles of Incorporation with the federal or provincial government, appointing directors and meeting the requirements for corporate governance.
Are there any tax incentives for businesses in Canada?
Yes, Canada offers various tax incentives, including the Scientific Research and Experimental Development (SR&ED) tax credit, which provides incentives for R&D activities, as well as incentives for clean energy and certain regional tax credits.
How long does it take to incorporate a company in Canada?
Incorporation in Canada can take anywhere from 1 to 3 weeks, depending on whether the incorporation is done at the federal or provincial level and how quickly the required documents are submitted.
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