May 19, 2020

Why Companies Should Invest in Canada

Canadian business
research and development
Canadian innovation
Canadian investment
Bizclik Editor
3 min
Why Companies Should Invest in Canada

 

Canada has become a viable country for companies domestic and foreign to utilize in business operation investment. With all types of industries eyeing Canada as their next frontier (especially the US retail market), Canada’s collaboration with foreign investment is beneficial for both parties. The Canadian Government’s acceptance of investment importance has created an even better market for foreign companies with the country’s tax credits and grants. This month, Business Review North America explains why Canada has become a leader in investment opportunities.

 

Economy

Canada was able to fare pretty well during the global economic recession, even better than its southern counterpart in the US. Not only has Canada recovered all jobs lost during the recession, it’s seen job growth as well. Statistics released by Invest Canada show that as of September 2012, 769,800 more Canadians are employed than when the recession ended in 2009. Canada overall has seen employment growth of 1.48 per cent from 2001 to 2011, reaching a percentage higher than Germany, Italy, the UK, France, the US and Japan.

Additionally, the Canadian Government’s implementation of stimulus packages, one of the largest among developed economies, during the global economic downturn, proves that the government is committed to growth.

“Canada understands the importance of its business community and has created an environment to encourage its success,” said Think Canada in an official report.

Industry analysts agree in the potential for Canadian business success. The Economist Intelligence Unit released its global business rankings in September 2012 with figures that showed Canada as the best place to do business in the next five years, in comparison to G-7 countries. Even further, Forbes’ ranked Canada as number one out of 134 countries in its annual study on the Best Countries for Business.

 

SR&ED

Another important way Canada is attracting more investment is through its scientific research and experimental development (SR&ED) tax incentive program. A program aimed at the private sector, SR&ED seriously benefits Canadian-based companies, foreign backed subsidiaries and Canadian Controlled Private Corporations (CCPC) by offering a 20 per cent to 35 per cent tax credit depending on corporation size and qualification.

Whether the company is large or small, or in which industry it operates, qualification is based on the investment and performance of R&D.  Other benefits to the program include the eligibility to deduct full costs of R&D machinery and equipment, no limits on subcontracting and the ability to earn tax credits for salary and wage costs for Canadian-resident employees that perform R&D tasks outside of Canada to support Canadian SR&ED projects.

Through this program Canada has seen success in the attraction and retention of investment.

“We have had a tremendous experience in Canada, having found great capabilities in R&D, engineering, processor development and software development. This has helped us grow from a company with $52 million in Canadian revenues in 1994 to $2 billion today,” said Robert Lloyd, Executive Vice-President for Worldwide Operations, Cisco.

This support from the Canadian government, federal and provincial, has led Canada to become a leading country for certain industry development, including the video game design industry.

"Forbes Magazine's most recent Best Countries For Business rating ranked Canada No. 1, citing our ability to skirt the financial meltdown that's plaguing the U.S. and Europe, our banking system's solid lending practices, trade freedom, a reformed tax structure and a lack of red tape," said Bill Elliot, Integrative Trade Consultant with Canada's Technology Triangle Inc. "When you add Ontario's strategic focus on gaming and digital media, government incentives can cut costs for game developers and producers by up to 40 per cent, and fast-track policies that make it easy for companies to relocate key personnel as well as their spouses, the Ontario Technology Corridor is a very compelling choice."

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Jun 8, 2021

Six issues at the top of tax and finance leaders’ agenda

Tax
Compliance
financeleaders
Deloitte
Kate Birch
4 min
As businesses accelerate their transformation journeys, tax leaders are under increasing pressure to add strategic value. Deloitte reveals six tax trends

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.

According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.

And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.

Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.

Trend 1: Businesses seek more strategic counsel from tax

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.

According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”

Trend 2: Tipping point for resourcing models

Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.

Trend 3: Digital tax administration is moving faster than expected

in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.

"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."

Trend 4: Data simplification and lower-cost resourcing are top priorities

Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.

At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”

Trend 5: Skillsets are shifting

Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.

Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact 

Trend 6: 2020 brought productivity improvements

Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.

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