To boost Canada's commercial competitiveness in areas including produce, energy, high-value services and products, the country's government is working on the Transformational Infrastructure Plan.
Infrastructure has always been an attractive investment sector in Canada. It plays an important role in the daily life of Canadians and it's also crucial to improve the country's productivity. To get the best out of its infrastructure, the federal government is developing the Transformational Infrastructure Plan - which covers public transportation, green and social infrastructure and the creation of a Canadian Infrastructure Bank.
Here are some of the main parts of this plan and how businesses – like engineering companies, among which there has been growing interest in the country - can benefit from doing business in Canada.
Adding up the down payment of $11.9bn the Canadian government made on its Budget 2016 Plan, the $81bn proposed in the Fall Economic Statement and additional investments, the government estimates it will be investing more than $180bn over the next 11 -12 years.
Some of the investment programs include:
- Public transit investments focused on expansion projects, new urban transit networks and service extensions to build a 21st century transit system.
- Green infrastructure to support greenhouse gas emission reductions and ensure climate change adaptability. This includes special investments in projects such as inter-provincial transmission lines, the development of new low-carbon/renewable power projects, water treatment projects on reserve, among others.
- Social infrastructure investments focusing on areas such as affordable housing as well as cultural and recreational infrastructure, among others.
- Transportation infrastructure that supports trade to boost Canada's competitiveness. This program focuses on building more efficient transportation corridors to international markets and the strengthening of the country's North community connectivity to trade and investment opportunities.
Canada Infrastructure Bank
The creation of a Canadian Infrastructure Bank was recommended by the Advisory Council of Economic Growth for the Canadian Government. The main purpose of this bank is to fund and finance infrastructure projects that contribute to economic growth through loans, loan guarantees and equity investments. The Bank is expected to invest at least $35bn, ensuring the best project selection process and best practice adoption in project procurement and delivery.
The Canada Infrastructure Bank is also expected to deliver more than $200bn worth of projects in the next 10 years, and leverage institutional capital from banks, pension funds, insurance companies, sovereign wealth funds and other long-term investors.
Advantages and considerations for engineering companies in Canada
Considered the 4th most attractive country for global infrastructure investments, Canada offers advantages to engineering companies interested in business set-up in the following ways:
- Location: Canada is located in a geographically superior area for global trade. The Greater Toronto Area, including Canada's largest city – seven million inhabitants - and Southern Ontario is within a one hour flight and a day's drive from key US cities.
- Business environment. The country ranked first on the G20 list of best countries to do business in over a five year period from 2016-2020.
- Canada's highly educated workforce: Canada ranks fourth in the world in for building and leveraging its human capital potential, according to the World Economic Forum.
- Corporate tax: Canadian corporate tax is around 12.7 percentage points below the US rate. From the year 2000 to 2015, the CT rate has reduced from 42.4% to 26.3%.
- The ease of starting a business: Canada was ranked as the third-best place to start a business in the world.
- Banking system: Canada is home to the world's safest and most valuable banking systems. It ranks 6th on the list of the world's 50 most secure banks.
Taking advantage of these factors can lead to great business investment opportunities for international companies. However, some considerations (not limited to the list below) must be analysed to mitigate any compliance risk in in Canada.
- Selling in to Canada before planning your corporate structure: sales prior to planning can incur higher tax rates and additional compliance.
- Employing foreigners and/or Canadians: Canada requires withholding of tax from the employee and foreign contractor pay cheques.
- Multi-jurisdictional VAT: Canada has 10 provinces, each with their own VAT requirements. Advance planning can be important here, to be most cost-effective. Some of your customers could also be VAT exempt.
- Lead times: the sooner you engage experts regarding doing business in Canada, the more cost-effective and numerous your options are.
- Requirements for your physical presence: these requirements affect immigration considerations, travel, payroll, and tax – consultation before beginning a physical presence in the country is important.
Contact our experts in Canada to find out how we can help grow your business.
Next Wednesday, 15 February TMF Canada along with Trade and Invest British Columbia, MEP Business Counsel and LzLabs GmbH will host an online panel discussion about "Effective investments in Canada: Key considerations in your expansion plans". Register here to join: https://pgi.webcasts.com/starthere.jsp?ei=1133039
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.