U.S. business expansion into Canada
U.S. businesses that expand to Canada need to be aware of Canadian income, sales and other tax issues and how they impact their business activities and how the issues integrate with their U.S. tax issues.
Options for U.S. businesses in Canada
U.S. businesses can choose alternative strategies to conduct business in Canada including using their existing U.S. entity or a Canadian entity. Payments to certain U.S. entities may require Canadian customers to deduct and remit Canadian withholding tax on certain payments. Overall income tax liability, simplicity of operation, minimization of withholding taxes and compliance with Canadian tax reporting requirements are some of the variables we consider when recommending a strategy.
Sales tax and Goods and Services Tax (GST)
In addition to Canadian and U.S. corporate income tax issues, U.S. businesses need to understand the Canadian sales tax laws, including Canada’s Goods and Services Tax (“GST”), a “value-added tax” and other requirements which can be quite different than in the U.S. U.S. businesses may also transfer their own employees to Canada for a period of time which may impact the individual’s personal income tax situation.
U.S. domestic tax issues still require consideration
Local Canadian firms often provide Canadian tax planning advice to U.S. businesses without understanding and considering the U.S. domestic tax issues. Such action can result in an inefficient ownership structure which may result in a higher overall tax liability. Andersen understands that U.S. businesses need to consider both Canadian and U.S. tax law when creating an effective strategy.
Contact Andersen to identify your ownership strategy and tax implications before you start business in Canada or just to evaluate the alternatives that may be available to you. We will work with your existing advisor(s) to implement the proper strategy. We will provide information, answers, and solutions specific to your own situation so that you can maximize your after tax returns and can also prepare the required Canadian income tax returns.