Taxes and R&D; Incentives
Canada offers lower corporate income tax rates than the United States, for manufacturing operations
Compared to key North American chemical producing regions, almost all Canadian locations have lower overall taxes and payroll benefit costs.
|
Effective Tax Ratio* |
|
Provinces/States |
Health, payroll and sales taxes (%) |
Property taxes (%) |
Capital taxes (%) |
Income taxes (%) |
|
Alberta |
2.7 |
6.0 |
1.6 |
47.2 |
|
British Columbia |
9.1 |
18.7 |
4.8 |
46.4 |
|
Ontario |
4.4 |
4.8 |
4.4 |
46.3 |
|
Quebec |
3.5 |
4.3 |
10.0 |
38.0 |
|
Louisiana |
7.7 |
4.0 |
3.2 |
55.1 |
|
Texas |
5.1 |
29.2 |
0.7 |
46.3 |
|
Source: Canadian Chemical Producers' Association
* present value of taxes divided by present value of net cash flow before taxes |
R&D; Incentives
Canada offers significant R&D; savings, with generous tax credits and a broader definition for qualifying expenses
- Full immediate write-off for all expenditures in R&D; capital equipment.
- Firms can also significantly reduce R&D; costs through direct investment or by subcontracting in Canada.
- The KPMG 2004 international business cost study shows Canada offers the best R&D; tax treatment among industrialized nations in Europe, North America, and Asia-Pacific. In fact, in Canada refundable R&D; tax credits can result in negative income tax (or net government subsidies) for R&D; operations.
|
Effective Combined Corporate Income Tax Rates for R&D; Operations |
|
Country |
Rank |
R&D; average (%*) |
|
Canada |
1 |
-5.5 |
|
United Kingdom |
2 |
-0.2 |
|
Australia |
3 |
11.2 |
|
Iceland |
4 |
19.9 |
|
United States |
5 |
20.1 |
|
Luxembourg |
6 |
26.6 |
|
Netherlands |
7 |
34.4 |
|
France |
8 |
34.7 |
|
Japan |
9 |
41.4 |
|
Germany |
10 |
42.3 |
|
Italy |
11 |
70.1 |
|
Source: KPMG Competitive Alternatives, 2004
* Percentage of net profit before tax for representative operations |