In addition to tax optimization strategies for your operations in Canada, tax compliance is an essential consideration for companies with activities in Canada/Québec.
Thus, companies operating in Canada are subject to income taxes. The combined (federal and provincial) tax rate in Québec is 26.8% in 2017 (for companies that are not private companies under Canadian control). Provincial tax is determined according to the provinces where the company maintains an ongoing presence (according to sales percentages and salaries). Companies must produce tax returns no more than six months after their fiscal year-end (but tax liabilities must be paid within two months after fiscal year-end). Companies are required to make monthly instalment payments.
Companies may be required to file information returns with their tax returns with respect to:
- transactions with unaffiliated non-resident companies,
- affiliated foreign companies in which a participating interest is held, or foreign property.
Transactions among the Canadian affiliate, its parent company and its foreign sister companies are usually straightforward. They may require tax documentation, which is important to take into account beforehand (dividend payments, interest payments, royalty payments, sending foreign workers to Canada, service billing, etc.).