US Expansion into Canada
US 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 US tax issues.
Options for US Businesses in Canada
US businesses can choose alternative strategies to conduct business in Canada including using their existing US entity or a Canadian entity. Payments to certain US 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 US corporate income tax issues, US 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 US. US businesses may also transfer their own employees to Canada for a period of time which may impact the individual’s personal income tax situation.
US Domestic Tax Issues Still Require Consideration
Local Canadian firms often provide Canadian tax planning advice to US businesses without understanding and considering the US domestic tax issues. Such action can result in an inefficient ownership structure which may result in a higher overall tax liability. Andersen Tax LLP understands that US businesses need to consider both Canadian and US tax law when creating an effective strategy.
Contact Andersen Tax LLP to identify your ownership strategy and tax implications before you start business in Canada or just 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.