Canadian companies that aspire to sell their products or services worldwide would have a comparative disadvantage if their entire worldwide income was taxed at Canadian tax rates. This is due to the fact that income& commodity taxes are lower in many other countries. Tax minimization strategies for these companies include setting up entities in countries like Bermuda and Barbados.

These tax structures are duly approved by the Canadian Government and CRA so that Canadian companies can transect business internationally without undue disadvantage from counties with much lower tax rates. The idea is to sell worldwide and bring the profits right back to Canada after paying minimum taxes. These profits can then be used for reinvestment and expansion.

Worldwide profits can be repatriated back to Canada after taxation at as low as 3%!

This compares very favorably with normal Canadian tax rates which could be as high as 40%. The cost of setting up and administering these structures is miniscule in comparison to the savings it brings.

If your company is planning to sell outside of Canada regularly, ask us how we can help.