We regularly advise foreign clients on expanding their businesses to Canada. In this document, we outline the most common questions that we hear from clients and discuss some of the most common considerations for companies looking to expand to Canada.
1. Understanding Canada's Legal Landscape
Canada has 10 provinces and three territories. Certain matters, such as healthcare and education, are largely within the jurisdiction of each individual province. Other matters, such as interprovincial trade, are largely within the jurisdiction of the federal government. And in many cases, there is substantial overlap. For example:
Corporate Law: Businesses can incorporate under the laws of the applicable province's/territory's corporate statute, or they can incorporate federally under the Government of Canada's corporate statute.
Tax: Taxes are a blend of federal and provincial components. Canada has a VATlike tax that includes a federal component (GST) as well as a provincial component (PST). In some most provinces, including Ontario, the GST and PST have been integrated, meaning consumers simply pay a harmonized sales tax (HST). Similarly, income tax rates vary from province-to-province.
Privacy: While Canada's main privacy law that applies to companies is federal, certain provinces have their own privacy legislation that – while substantially similar – may contain additional requirements that businesses targeting customers in those provinces must comply with.
While statutes vary from province-to-province, corporate law and employment law are largely similar across the country (with the exception of Quebec, the only Canadian province that uses a civil law system). Just as Louisiana is the only civil law jurisdiction in the United States, Quebec is the only civil law jurisdiction in Canada (stemming from its French heritage). The other Canadian provinces and territories are governed by common law (stemming from their English heritage).
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.