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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 miss understood. 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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Evelyn Ackah is fantastic! She and her team are very knowledgeable and she expresses genuine concern for her clients. We represent many foreign investors and business owners looking to relocate to Miami in order to provide a better life for their families. I would not hesitate to refer any one of them to Ackah Law to assist with their immigration matters. Highly recommend!

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