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How Non-Residents Can Open A Business in Canada

Blog posted on by Evelyn Ackah in Business Immigration to Canada and Business Immigration Law

How Non-Residents Can Open A Business in Canada

If you are a business owner but not a resident of Canada and want to grow your business and open a location in Canada, there are two main ways for existing foreign corporations to register to operate in Canada:

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1. Open A Branch Office
To open a branch office a foreign corporation must apply as an extra-provincial or foreign corporation in each province in which the business intends to operate.

2. Incorporate a Subsidiary
A subsidiary is a Canadian corporation whose shares are held by a foreign parent company. A subsidiary can be incorporated federally or provincially. Compared to a branch office, incorporating a subsidiary gives the parent company limited liability from the actions of the subsidiary.

Are You A Foreign Business That Wants to Open A Business in Canada?

You do not need to be a Canadian citizen or resident to open a business or branch in Canada, says Cross Border and International Tax Expert James Belesiotis:

A non-resident does not have to be a resident to operate a business or branch in Canada however, the business might be subject to a higher tax. Privately held corporations enjoy a federal tax rate of 9% assuming it's a Canadian Controlled corporation (for income up to $ 500,000). A non-resident who does not become a resident of Canada (which may or may not involve specific conditions in their specific tax treaty) will experience an increase to the federal tax rate by 29% points or 38% - this computes to an additional federal tax liability of $ 145,000 before provincial tax is imposed.

Should a non-resident corporation deploy an employee to render services even for a single day in Canada triggers a resulting payroll withholding obligation as noted in Tax Regulation 102.

Non-residents performing non-employment in Canada is subject to Tax Regulation 105 and typically misunderstood. A non-resident corporation engaged by another non-resident to perform services in Canada is subject to a 15% withholding requirement.

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B2B Immigration Legal Guidance

The guidance of an experienced Canadian immigration lawyer can be very helpful if you are planning to incorporate a company in Canada as a non-resident. For example, different provinces have different residency requirements to open a business - and different tax rates:

  • Ontario requires that 25% of directors must be Canadian in order to incorporate.
  • In British Columbia
  • If 51% of the shareholders of a Canadian corporation are non-residents of Canada you will lose the small business tax deduction, and your corporate tax rate will increase to 26.5% instead of 15%.
  • In Ontario, profits distributed from a Canadian corporation to non-resident shareholders are subject to a withholding tax that can range from 5% to as high as 25%.

Learn about the benefits of using an immigration lawyer with the links provided below:

Why Choose Ackah Law?
Why Hire An Immigration Lawyer?

Have an immigration lawyer on your side:
Call Ackah Law BEFORE you cross the border: 587-602-0179.

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Evelyn L. Ackah, BA, LL.B.

Founder/Managing Lawyer

Ms. Ackah is passionate about immigration law because it focuses on people and relationships, which are at the core of her personal values. Starting her legal career as a corporate/commercial ...

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