Canada is a country with high welfare and high taxation. High taxes tend to discourage foreign and domestic investors, which is not conducive to the development of Canadian economy. The Canadian government is also aware of the adverse impact of high taxes. Therefore, a number of tax incentives have been specially designed to help small businesses and manufacturing industries. Corporate tax preferences in Canada are usually reduced to the normal corporate tax rate, and sometimes even reduced the tax rate by 70%, in order to promote the development of enterprises. Generally speaking, taxes and taxes are imposed on Canadian federal, provincial and local governments at all levels of production and business operations in Canada. The taxes levied at various levels of government are as follows: Taxes levied by the federal government include corporate income tax, fuel tax, and product tax ( Including sales tax and customs duty). Taxes levied by provincial governments include corporate income tax, capital tax and commodity tax (including retail tax, cigarette tax and liquor tax), while local governments charge property tax and commercial tax.Therefore, the tax burden on investment and entrepreneurship in Canada is quite heavy. Clever use of the tax incentives provided by the government to reduce tax costs is an important part of business management. Since the federal government is the largest tax collector, general tax incentives are designed by the federal government, which often provides businesses with the same tax breaks. The most important tax benefit that the federal government of Canada offers to businesses is the “imposition of a small business tax rate”, which reduces the federal corporation income tax rate for small businesses. The federal corporation income tax in Canada has a basic tax rate of 15%, while “implementing a small business tax rate” reduces the federal corporation tax rate to 11%, benefiting companies including all Canadian-owned businesses. This preferential tax rate is only applicable to the profits of the first 200,000 Canadian dollars earned by the active business. Other profits, such as income from real estate investment and interest, are not eligible for this tax incentive.
- Tax incentives in the manufacturing and manufacturing industries: Another tax benefit for Canadian businesses. Its main purpose is to help Canadian manufacturing and manufacturing enterprises and create employment opportunities. A company can reduce its federal income tax rate by an additional 8% if it receives both “manufacturing and manufacturing tax benefits” and “small business tax benefits.” In this way, the federal and provincial corporate tax rate collected only 13-20%. Canadian domestic and foreign enterprises as long as eligible, can enjoy tax concessions.
- Encourage businesses to invest in plant and machinery: The Canadian government has set a special “investment tax credit” for this purpose. As long as the investment expenditure of the enterprise is for the production of the product, the enterprise can deduct a corresponding percentage of the tax directly from the income tax payable. If the enterprise is not profitable, the profit is low, and the company income to be paid is not enough to offset the amount of investment tax deductible, the enterprise may retain the credit for a period of seven years. During this period, when the enterprise has sufficient profits , You can still use this credit. Like many countries, Canada also has a depreciation credit. General machinery, plant and other production equipment (except land), can be depreciated credit tax incentives.
- Tax incentives for high-tech development industries: The Canadian government encourages more businesses to invest in high-tech research and development and allows them to deduct R & D expenses from their pre-tax costs to ease the tax burden on businesses.