Company incorporation in Canada

If you do business in Canada there may be a point that it makes sense to set up a local company. Then you need to know how to comply with local regulations and who can help you.

This article describes:

the most likely types of company to set up;
how you do this and who can help you;
a few important fiscal regulations.

Your legal entity in Canada

Canada, known for its stable economy, highly skilled workforce, and proximity to both the United States and the global market, is an attractive location for foreign companies.

Most Common Business Forms for Foreign Companies

The most common business structure for foreign companies in Canada is the Private Corporation (Inc.).

Similar to a private limited company (Ltd) in other countries.
Provides limited liability protection to shareholders, meaning personal assets are not at risk for company debts.
Requires at least one director, and the company must have a registered office in Canada.

An alternative is the Branch Office, which allows a foreign company to operate in Canada without forming a separate legal entity. However, the parent company remains liable for the debts and obligations of the Canadian branch.

Setting Up a Company in Canada

Incorporating a private corporation (Inc.) in Canada involves several key steps:

Choosing the name of the company and ensuring it is unique through a name search with the Canadian government.
Filing Articles of Incorporation with the provincial or federal government.
Designating at least one director, who can be a foreign national (must reside in Canada if the company is incorporated federally).
Obtaining a Business Number (BN) from the Canada Revenue Agency (CRA) for tax purposes.
Registering for Goods and Services Tax (GST) or Harmonized Sales Tax (HST), if applicable.

Foreign nationals can serve as directors of Canadian companies. While there are no residency requirements for directors at the provincial level, federally incorporated companies require at least 25% of directors to be Canadian residents.

Taxation and Withholding Taxes

Corporations in Canada are subject to both federal and provincial corporate income tax. The federal corporate tax rate is 15%, and provincial tax rates vary between 11% and 16%, depending on the province.

Regarding dividends:

Dividends paid to foreign shareholders are subject to a 25% withholding tax, which may be reduced through tax treaties between Canada and other countries.
Canada has an extensive network of double taxation agreements, allowing foreign investors to benefit from reduced withholding tax rates.

Service Providers for Company Incorporation

These service providers offer support with business registration, tax compliance, and other essential services to help foreign entrepreneurs establish their businesses in Canada.

Travel to Canada for a better impression

The best preparation for doing business in any country is visiting it. This way you can experience the culture, check the shops and build your network.

With Trip.com you can compare flights and also book your hotel.

Hotellook compares different hotel sites so you always have the best rate.

Localrent connects you to national rental car providers per country.

Frequently asked questions

How to convince an importer in Canada to work with you?

As in any country, convincing an importer or wholesaler to put your product in his assortment is difficult. Also in Canada importers look at the rotation of the product, how easy and often they can sell it, and multiply this with the margin they can make on it. The result should be higher than they earn now from any competing product. Only if you have proper sales data, for example from other countries, they will engage in a discussion with you.