Executive Summary
Canada (territory plus its waters) is the world’s second largest country, which is located on the North American continent. Canada is a federal state which consists of ten provinces and three territories. It covers a total area of 9,984,670 sq km. The country is a constitutional monarchy, parliamentary democracy. The UK monarch is the head of Canada. Canada has strong democratic traditions. Ottawa is the capital of Canada, which is a bilingual state, with two official languages – English and French.  A number of minor regional languages are recognized in the country as well. Canada is a member state of several international organizations, including NATO, G8 and OECD.

Canada has a diversified, industrialized, technologically advanced, developed economy. It possesses significant natural resources, which play a crucial role in the state economic development. It has a high GDP per capita and low unemployment rate. In addition to highly developed and diversified industries, Canada is also an important agricultural products exporter. It is the world’s biggest producer of zinc and uranium, as well as one of the leaders in nickel, aluminium and gold. Its services sector is well developed as well.

The Canadian dollar (CAD) is the state currency.

Canada is not a densely populated country. It has a diversified and picturesque landscape – it has more lakes than any other country, several big and small rivers, mountains, Virginia Falls (twice higher than Niagara Falls), different types of forests.

Canada is rich with natural resources; earthquakes and active volcanoes are characteristic to the country.

Climate and weather of Canada vary significantly in its different regions, due to their location and distance from mountains or oceans. Generally, summers are rather hot in Canada, while temperatures below zero are experienced in winter.

Map, Flag and Coat of Arm

Types of Company

Canadian-Controlled Private Corporation

It is a Canadian resident company which is fully controlled by Canadian residents. It is not a public company. It should not be controlled by a public company or a company the shares of which are listed on a foreign stock exchange. Its own shares are not listed on any stock exchange.

Other Private Corporation
This type of company is directly or indirectly administered by non-residents of Canada. A company itself is deemed to be resident in the country. It is not a public corporation and is not controlled by a public corporate entity.

Public Corporation
A company is a public corporation when it declares it and follows the relevant rules. This type of company may offer its shares to the general public. A public corporation may elect to become a private company, following a precisely prescribed procedure.

Corporation Controlled by a Public Corporation
This type of company is controlled by a Public Corporation.

Holding company
Structured in a certain way, it may be attractive to incorporate a holding company in Canada, which may be exempted from taxation on dividends paid by a foreign affiliate to its Canadian parent, in case the following conditions are satisfied. First of all, a foreign affiliate must be a resident in a designated country, with which Canada has a tax treaty. Secondly, dividends must be paid out of the foreign company’s “exempt surplus”: profits from an active business activity, several capital gains, dividends received from other foreign affiliate entities’ “exempt surplus”.

Income Trust
This type of trust is designated to hold income-producing assets/activities of a Canadian company, which may significantly reduce a taxable base of a corporation. Due to a rapid increase of this type of structure which caused significant tax minimization, the Canadian government plans to tax this type of trusts as other corporations, starting from 2011.


A resident of Canada is a person who spends at least 183 days on the country’s territory, and is taxed on his world-wide income. It is harder for Canadian residents to cease being residents there in comparison to many other countries. Ceasing their status of residents is intended as their will not to return to country as a resident any more, and in order to achieve it, it must be demonstrated that all the ties with Canada no longer exist. Non-residents are liable to taxation only on income and capital gains derived from activities/assets held in Canada.

Income tax has a scalable nature in Canada, the rates of which increase together with the increase of an individual’s total annual income. This tax is levied by the central government and provinces. A total income tax rate may exceed 40%. Some provinces levy tax for health and medical care.

Companies are liable to pay corporation tax on their profits derived from business activities as well as on capital gains. Sales tax, which in Canada is called Goods and Services Tax, is levied by the central government and by almost all the provinces. Property taxes are charged at a local level. Excise duties on cigarettes, alcohol and petrol are levied by the federal and local governments. Withholding taxes are payable on several transactions.
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