In many cases, foreign companies doing business in Canada are in
need of additional expertise to effectively navigate the Canadian
tax system. Specifically, U.S. companies find themselves
confronting a tax environment that is very different from their
domestic system. When doing business in Canada, here are some of
the key tax considerations foreign companies should be prepared to
navigate.
Threshold for taxation
In our opening conversation with a foreign based client, we must
first determine if they will be subject to income tax in Canada. We
need to conclude if they are operating in Canada with or without a
"permanent establishment," as this ultimately determines
their exposure to Canadian income tax. If carrying on a business in
Canada without a "permanent establishment," there is
typically a treaty exception available. For example, businesses
that are simply selling and shipping goods into Canada with no
physical presence or employees deployed to the country
