Factoring

Receivables must be purchased without recourse

• By establishing an international business (IB) in British Columbia, a company can receive a full refund of the British Columbia taxes paid on the net income of the IB (75% refund for patent income). 
• Companies can register a business or part of a business in the program. For income to qualify for the refund, one side of the transaction must be with a non-resident.
• The International Business Activity Act (IBAA), legislated by the Province of British Columbia in 2004, provides the legislative framework for the tax incentive.

Qualifying Activities

• Factoring qualifies for favourable tax treatment as long as the receivables have been purchased outright from a non-resident and without recourse.
• Collecting trade accounts receivable from non-resident for a non-resident affiliate or customer.

British Columbia's Competitive Advantages

• Administrative support services related to a financial activity are eligible under the IB program.
• Individuals employed by a registered company (IB Specialists) may also qualify for up to a 75% provincial personal income tax refund for the first five years of employment.
• British Columbia’s corporate tax rate was reduced to 10.5% in January 2010. The corporate tax rate is being further reduced to 10% as of January 1, 2011.
• Canada will lower its corporate tax rate to 15% by 2012. The new rates are being phased in; the corporate tax rate is 18.0% as of January 1, 2010.
• BC's west coast time zone is ideally suited to centralizing collection activities which can service and close out the day in all North American time zones without the need to have staff work late in the evening.
• As Canada’s trade gateway to the Pacific, British Columbia is uniquely positioned as a factoring location for companies doing business in or wishing to expand into Asia.
• The Port of Vancouver is the closest major North American port to Asia and a strategic alternative for container cargo destined for U.S. markets. Facilities include 25 major marine cargo terminals, 67 berths and on-dock rail facilities that handle more than 70 million tons of cargo each year.
• 41.7% of people residing in Vancouver are visible minorities (24.8% of British Columbians).
• In Vancouver, 46.5% of the population know one or more non-official languages (31% in British Columbia).

Registering an IB

Further details on the IB program can be found in Bulletin IFA 001, International Financial Activity Overview.

The program is administered by the BC Ministry of Finance (formerly the BC Ministry of Small Business and Revenue). For more information regarding the legislation or provincial registration, please visit their website. The information on this website is provided for convenience and guidance only and is not a replacement for the legislation. Businesses considering accessing the benefits under the IBAA should consult with their professional advisors on the applicability of the legislation to their particular circumstance.

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