Canada has long stood out as a top-tier choice for investors, entrepreneurs, and families looking to build a prosperous future. Apart from its scenic natural beauty and multicultural cities, Canada’s robust economy and forward-thinking policies offer a foundation upon which dreams can be securely built. In this blog, we delve into:
- Global Rankings for Canada as a country to invest in
- 9 Advantages of Investing in Canada
- Government incentives for investors in Canada
Global Rankings and Statistics for Canada as a Country to Invest in
As investors and entrepreneurs around the world seek out the most promising and stable markets, here are some persuasive rankings and statistics that shine the spotlight on Canada, not just as a contender, but often as a leader in many respects:
- According to UNCTAD’s 2022 World Investment Report, Canada attracted USD 59.6 billion of FDI in 2021, a 157% increase from 2020, when FDI inflows reached USD 23.1 billion. In the same year, the stock of FDI rose to USD 1,43 billion.
- Canada ranked 14th in the World Competitiveness Index published by the International Institute for Management Development (IMD).
- Canada ranks third out of 190 countries in the World Bank’s Doing Business survey on starting a business.
- Canada ranked #1 as the fastest-growing country by population.
- It also ranked #3 in quality of life.
- Canada’s federal government corporate income tax rate is one of the lowest in the G7.
- Canada is the 2nd least corrupt country and 6th most transparent country.
- Canada is the overall 2nd best country and 11th country that is open for business.
- Canada has the world’s third-largest oil reserve.
- It is the second-best country for having a corporation’s headquarters.
9 Advantages of Investing in Canada
- Robust Financial and Banking Sectors: Canada’s financial and banking sector is seen as a pillar of strength, largely attributed to the dominance of the Big Six banks, which hold over 90% of the country’s banking assets. This concentration enables effective regulation, creating a well-diversified system that mitigates the risk of bank runs. Unlike the U.S., where bank failures are more common, Canada has not seen a bank failure since 1996, thanks to prudent practices and stringent regulations by the Office of the Superintendent of Financial Institutions. These factors, combined with a diversified banking structure that includes credit unions and other banks, ensure Canada’s banking system remains a model of stability and resilience in the face of global financial challenges.
2. Market Access: Canada offers unparalleled market access for businesses. Its commitment to free and open trade, evidenced by 15 free trade agreements, grants companies preferential access to a massive consumer base of 1.5 billion across 51 countries. The top trade agreements include:
- The Canada-United States-Mexico Agreement (CUSMA)
- Canada-European Union Comprehensive Economic and Trade Agreement (CETA)
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
This extensive trade network is complemented by Canada’s world-class transportation infrastructure, seamlessly connecting products and services to international markets through all modes of transport like road, rail, sea, and air. Canada is the perfect hub for businesses aiming to tap into the global marketplace with reduced risk and simplified operations.
3. Premium Workforce: Canada’s workforce boasts the distinction of being the world’s most educated. With a strong emphasis on STEM (Science, Technology, Engineering, and Math) education, Canada nurtures a culture of innovation, further bolstered by its rank as the 3rd-best country for entrepreneurs and the #1 global destination for individuals with master’s degrees or doctorates. This focus on high-level education and a welcoming environment for international talent reinforces Canada’s position as a hub of premium, innovative talent.
4. Innovation Ecosystem:
Canada’s innovation ecosystem is a key factor in its success as a global investment destination. This ecosystem is a collaborative network involving thinkers, entrepreneurs, business leaders, academics, researchers, and policymakers. It features business incubators and accelerators that provide resources, expertise, and funding to help start-ups and early-stage companies grow. The Innovation Superclusters Initiative is a notable component, designed to drive economic growth and job creation through public-private partnerships in fields like advanced manufacturing, digital technology, AI, agriculture, and ocean sciences.
5. Environmental Sustainability: Canada already ranks highly in global sustainability metrics, being the 2nd most attractive country for green energy projects, 4th among G7 countries on the Green Future Index, and recognized as #1 in the world’s most sustainable countries.
- Net-Zero Goals: Canada is actively working to scale up current technologies and innovate new solutions to reduce greenhouse gas emissions by 2030 and achieve net-zero emissions by 2050.
- Diversity Milestones: With a workforce that is educated, highly skilled, and culturally diverse, speaking over 200 languages, Canada prioritizes diverse representation, including women, Indigenous peoples, people with disabilities, and visible minorities, bolstering workplace diversity and inclusiveness.
- Green Energy Leadership: Through significant investments in sustainability, Canada has become a global leader in green energy incentives, including a renewable energy investment tax credit that offers a 30% tax reduction on renewable technologies.
6. Business Competitiveness: As of 2023, Canada is the G7’s second-fastest-growing economy after the US and is expected to lead in 2025 with a 2.3% GDP growth, as forecasted by Bloomberg economists. Key factors contributing to Canada’s competitive edge include its rapid population growth, substantial support for R&D with generous tax incentives, and a competitive inflation rate (2nd lowest in the G7).
Canada also has a business-friendly tax environment. Some examples include:
- One of the lowest corporate income tax rates and marginal effective tax rates (METR) in the G7
- Reduced tax rates for zero-emission technology manufacturers
- No tariffs on manufacturing inputs and machinery imports
- Tax credits for foreign-owned businesses engaged in research
- Tax incentives for clean technology initiatives
7. World’s Most Livable Cities: Amongst the top 10 World’s Most Livable Cities, Canada is the most represented country, with 3 of its cities, Vancouver, Calgary and Toronto featuring in this sought-after list. Residents say progressive politics, universal healthcare, and a sense of camaraderie are some of the top reasons why they could not imagine living in any other country.
8. Unmatched Transparency: Canada ranks as the #2 least corrupt country in the world. The Canadian government is always actively enhancing transparency and accountability. It has mandated the publication of details like travel and hospitality expenses for key officials, contracts over $10,000 (except for certain cases like national security), reclassification of positions, and awards for grants and contributions. Additionally, audit and evaluation reports are also made available to the public. This transparency initiative, including data on expenses, contracting, and grants, is accessible on Canada’s Open Government site, allowing Canadians and Parliament to more effectively hold the government and public officials accountable.
9. Canada’s Self-Sufficiency: Canada is largely self-sufficient across several key sectors. In terms of food production, about 70% of the food consumed within the country is domestically produced, highlighting its strong agricultural capabilities. Energy-wise, Canada is more than self-reliant, it produces a surplus of oil and natural gas beyond its own needs, positioning it as a significant player in the global energy market. In fact, it has the largest oil reserves after Saudi Arabia. Economically, the country boasts one of the strongest balance sheets in the world, underpinned by a stable financial system and a resilient economy.
Government Incentives for Investors in Canada
In Canada, investors find a fertile ground for growth and innovation, thanks in part to a range of government incentives designed to encourage investment and economic development. Below are a few pivotal incentives that are driving investments in Canada:
- Scientific Research & Experimental Development: The Scientific Research and Experimental Development (SR&ED) tax incentives in Canada aim to motivate businesses to engage in research and development within the country. These incentives are available to corporations, individuals, trusts, and partnerships engaged in eligible activities. There are two main benefits: the option to claim a deduction against income and the opportunity to earn an Investment Tax Credit (ITC).
- Accelerated Investment Incentive: Certain eligible properties can benefit from various tax measures in Canada. These include:
- Accelerated Investment Incentive: This provides an enhanced first-year allowance for eligible property under the capital cost allowance (CCA) rules. Full Expensing for Manufacturers and Processors: Businesses can immediately write off the full cost of machinery and equipment used in manufacturing or processing goods (Class 53).
- Full Expensing for Clean Energy Investments: This allows businesses to write off the full cost of specified clean energy equipment immediately (Classes 43.1 and 43.2).
- Strategic Innovation Fund: The Strategic Innovation Fund (SIF)’s main role is to provide support for innovative projects in Canada through simplified application processes, responsive, results-oriented assistance and funding (minimum SIF contribution amount is $10 million) for projects with total costs of at least $20 million.
- Global Skills Strategy: The Global Skills Strategy (GSS) is a program initiated by the federal government to assist Canadian businesses in acquiring skilled workers from across the globe.
- Innovation Superclusters Initiative: With an investment of $950 million over five years, matched by private funds, these superclusters are expected to generate $50 billion in economic growth over 10 years and create at least 50,000 jobs in Canada. The superclusters are:
Canada is Open for Investment
Widely recognized as a welcoming destination for foreign investment, Canada is consistently maintaining its position as the top country in the G20 for business operations. The World Bank’s Doing Business 2020 report even ranked Canada as the easiest place in the G20 to start a business.Furthermore, Canada also had the 2nd highest foreign direct investment (FDI) stock-to-GDP ratio among G20 countries from 2016 to 2020, according to the United Nations Conference on Trade and Development’s 2021 report.
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