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Tax Advantages in British Columbia
British Columbia compares favourably as a competitive tax location
- Locating an international financial business in British Columbia can increase profits. The International Financial Activity (IFA) program provides a 100% refund (75% on eligible patent activity) of British Columbia income tax paid on income earned in conducting an international financial business.
- An eligible corporation must register under the International Financial Activity Act (IFAA) to qualify. As the table below illustrates, under the IFA program, a registered company benefits from a considerably lower effective tax rate than companies in other locations.
How an IFB in British Columbia Compares
Global Corporate Tax Rates
|
Location |
Corporate Tax Rate (as of January 2010) |
Canada, BC IFC |
18.0% |
Switzerland (average) |
21.2% |
China |
25.0% |
| UK |
28.0% |
| Canada, BC |
28.5% |
Canada (average) |
30.1% |
Germany (average) |
31.5% |
| France |
36.3% |
| US |
39.1% |
| Japan |
41.0% |
How an IFB in Vancouver compares
According to the KPMG Competitive Alternatives (2008) Special Report: Focus on Tax, corporate taxes available through the IFC BC are lower than any location in North America.
Total Tax Index for Services
| City* |
Total Tax Index |
| Vancouver (IFC) |
65.0 |
| San Juan, US |
65.5 |
| Puebla, MX |
71.6 |
| Vancouver, CA |
77.0 |
| Guadalajara, MX |
82.6 |
| Atlanta, US |
92.7 |
| Montreal, CA |
94.5 |
| Toronto, CA |
94.8 |
| Phoenix, US |
95.4 |
| Tampa, US |
96.5 |
| Denver, US |
101.8 |
| Houston, US |
101.9 |
| San Diego, US |
104.7 |
| Melbourne, AU |
115.2 |
| Manchester, UK |
119.9 |
| Sydney, AU |
122.9 |
| Seattle, US |
125.3 |
| Yokohama, JP |
126.6 |
| London, UK |
128.3 |
| Frankfurt, GE |
182.4 |
| Naples, IT |
285.1 |
| Paris, FR |
304.7 |
*cities with a metropolitan population > 2 million
(KPMG Competitive Alternatives, Focus on Tax, 2008)
British Columbia’s Tax Advantage
- Effective January 1, 2010, British Columbia’s corporate tax rate was reduced to 10.5% from 11%. The corporate tax rate will be further reduced to 10% as of January 1, 2011.
- Effective April 1, 2008, British Columbia’s capital tax on financial institutions is being phased out by one-third in 2008, 2009, and 2010. (B.C.’s capital tax on corporations other than financial institutions was eliminated in 2002.)
- A number of major personal income tax reductions have also been enacted in British Columbia, cutting income tax rates by a third with the result that as of January 1, 2010, British Columbia will have the lowest income tax rates in Canada for incomes up to $118,000.
Canada’s Tax Advantage
- Over the past eight years, the Federal government has reduced corporate tax rates in Canada by 30%. The most recent reduction was announced in 2007: the corporate tax rate is being reduced from 22.12% to 15% by 2012. The rate for 2010 is 18.0% and rates for the next years are being phased in on January 1:
- Other measures undertaken by Canada to improve the business environment:
- The corporate surtax was eliminated for all corporations January 1, 2008.
- The federal capital tax on large corporations was eliminated January 1, 2006.
- Eligible arm’s length interest payments are not be subject to domestic withholding tax as of January 1, 2008.
- Eligible corporations can report their income for Canadian tax purposes in a functional currency other than the Canadian dollar.
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