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Offshore Company in Canada

General information

0%

Tax rate

7 days

Time of establishment of the company

None

Minimum capital

Canada is the second largest country in the world and has 36 million inhabitants. Economic and technological development has stimulated trade links with the United States, which received almost 80% of Canada’s exports. The country, which is rich in natural resources, has been able to grow on an equal footing with the United States, and in a relatively short period of time has built a modern economy based on services and a strong industrial sector.

 

Canada can be presented as a new offshore jurisdiction, but only some provinces have a status similar to those where the tax burden is relatively low (only 5%) if the activity is outside Canada. Canada is one of the countries offering the best image for the company. Canada allows the use of a nominee so that he or she is not on the public register.

What to keep in mind

Canada’s legal regime for company registration is as simple and transparent as the American system. The registration of a company can be carried out within a few hours, but opening a bank account requires a presence in Canada.  Most investors choose partnerships that are not taxed in Canada unless they do business in Canada.

Types of companies

The Canadian federal and provincial governments regulate the formal and legal framework for legal entities. The company is concluded in the form of an agreement between two or more persons, on the basis of which the partners undertake joint business activity by combining their means. The articles of association should be made in writing and a lawyer should be available for this purpose. In the company, the partners share the profit in accordance with the principles set out in the agreement. Companies operate on the basis of provincial laws, and a nomination involving the establishment of a company is valid and becomes effective upon registration with the relevant provincial or territorial authority. The registration of the company consists of a declaration of will by completing a declaration signed by all shareholders. This document must specify the scope of activity, province or territory of activity and the period for which it is established. The company may determine its own financial year. Changing the date of the financial year requires the consent of the Canada Revenue Agency. Company profits are treated as income of the company’s owners and are taxed at individual tax rates. The advantage of this form of activity is a larger number of management, the ability to undertake more serious business activities, easier access to external sources of capital.

  • In a limited partnership, one or more partners assume responsibility for the debt of the company. Other partners are liable for the company’s liabilities only up to the amount of the contributed capital.
  • A Limited Partnership (LP) may be established in the province of Ontario and will not be required to file financial statements in Canada or pay taxes.
  • A Canadian limited partnership (LP) can be established by one person who will be both a general partner and a limited partner. A company with such a structure may be set up by companies engaged in Internet commerce, intellectual property rights protection or real estate management.

Company registration procedure

Registration of the company:

  • Selection and reservation of the company name;
  • Preparation of a set of KYC documents (know your client), i.e. passport, utility bill and bank opinion;
  • Preparation of the articles of association and the company’s statute.
  • Appointment of the first board of directors.
  • Preparation and submission of a registration application together with other required documents.

Shareholders:

No restrictions on the number of shareholders, however, a minimum of one shareholder is required to establish the company. Foreign shareholders are allowed.

Management Board:

In addition to the shareholders, the company is managed by a board of directors. Directors may or may not be shareholders. At least ¼ of the board members must be Canadian residents unless the company has fewer than 4, in which case there must be one resident. The rules for resident directors may vary from province to province.

Registered office:

The Company must have a registered address in Canada, which will appear on the Company’s business documents and postal details. It is possible to use the services of a virtual office with a dedicated telephone number.

Time to set up a company:

The standard time of establishing a company is about a week.

Minimum capital:

No minimum capital required.

Taxes and finances

Corporate income tax can be reduced to 5% and in some provinces even to 0%. In order to benefit from such tax reliefs it is required that a shareholder is non-resident and the company’s operations were conducted outside Canada.

Accounting

The client is obliged to keep accounts, but is not obliged to report them to the local authorities. VAT applies only to locally provided services and, depending on the location, ranges from 5 to 15%.

Other information

Our clients use Canadian companies to conquer the North, Central and South American markets. These companies are very popular among IT, e-commerce and cryptovalute industries. If you are considering starting a start-up using ICO financing, Canada may be an interesting choice.