By registering under the International Financial Activity (IFA) program, a corporation carrying on a qualifying international financial business is eligible for a refund of up to 100% of its corporate income tax paid to the Province of British Columbia.

Tax Advantages of Doing Business in British Columbia

Rates based on $2 million income. US federal rates adjusted for state tax deductions.

*The Federal Government recently lowered corporate taxes. By 2012, corporate income taxes will be 15% in Canada--the lowest of the G7 nations.

As the chart indicates, establishing an office in British Columbia to transact a qualifying international business can lead to significant savings in taxes. In most cases, companies are eligible for a refund even when the activity is conducted with affiliates and related parties, as long as the activities are priced on an "arm's length" basis. To be eligible to register under the IFA program, a company’s international financial business must be part of an active business carried on through an office in British Columbia.

Eliminating BC's Capital Tax (2008)

In 2002, British Columbia eliminated the capital tax on non-financial corporations. Effective April 1, 2008, British Columbia began phasing out the capital tax on financial institutions by reducing the rates one-third each year. (The Federal capital tax was eliminated in 2006.)

Reducing BC's Tax Rate on Corporations

Effective July 1, 2008, British Columbia’s corporate tax rate will be reduced to 11 per cent from 12 per cent. Further reductions are planned to bring the corporate tax rate to 10 per cent by 2011. 

Canada's Tax Advantage

• To strengthen Canada’s corporate tax advantage, the Federal Government recently put forward a new tax reduction initiative that will lower the general corporate income tax rate to 15 per cent by 2012. It will be phased in on January 1 of the following years:

  2008 19.5%
  2009 19.0%
  2010 18.0%
  2011 16.5%
  2012 15.0%

• With these reductions, the general federal corporate income tax rate will decline by 7.12 percentage points between 2007 and 2012, a decline of one-third, and Canada’s corporate tax rate will be the lowest of the G7 nations.

• The corporate surtax was eliminated for all corporations as of January 1, 2008.
• The federal capital tax on large corporations was eliminated January 1, 2006—two years ahead of schedule.

The IFA program is administered by the BC Ministry of Small Business and Revenue, Revenue Programs Division, Income Taxation Branch. For more information regarding the legislation or provincial registration, please visit their website.