03 INTERNATIONAL TECH HUB | BDO LLP
CANADA
As with any business moving into any new country, Canada of course has its nuances in terms of tax regime, regulatory framework and so on. If you go into the process blindly, thinking you can just test the waters and attend a few trade shows and sign up some customers, you could easily come unstuck. But with some reliable professional advice, you could easily be set up and running within days. With the right advice from the outset, it’s really just a one-stop-shop, and you’ll be able to avoid all sorts of issues Today there are good tech companies right across the country. While there are still some specialised concentrations, in the past 20 years the requirement to be in a particular geographic area in order to develop a good software company in Canada has significantly reduced. In some cases, it can be a positive advantage to be in a geography that’s outside of the main centres. That’s not to say that there aren’t clusters, and they do tend to be in the bigger cities. Toronto has the biggest concentration of tech companies, followed by Vancouver and Montreal. And then you have Waterloo, which has always had a historical focus on technology through the world renowned University of Waterloo. before they develop into anything more serious. WHERE ARE THE KEY TECH HUBS LOCATED? Vancouver has long been known for gaming and electronic media, while Montreal has some very significant players in the AI space. Toronto has always been strong on mobile and software development. All the major banks and finance institutions have a strong presence in Toronto, so it’s no surprise that there is a strong fintech sector here too. HOW EASY IS IT TO ACCESS TALENT? Canada offers a rich pool of tech talent. A key reason for this is the country’s immigration system. Recent federal budgets have offered some administrative relief that’s geared to getting tech- type employees into Canada and streamlining the whole visa process. The other key factor is that the US has tightened up some of its entry requirements. This means that you have a lot of highly skilled coders and developers and skills – just the sort of people that emerging tech companies need – who might once have headed to Silicon Valley and other tech hubs stateside but are now drawn to Canada instead. In addition, we’re seeing job traction in the tech market from some of the big tech companies that are looking to move into Canada and setting up in key geographies like Toronto, Vancouver and Waterloo. This can be a double-edged sword, of course, because the big players have the power to pay bigger salaries and attract some of the high-value talent away from the start-ups and emerging scale-ups. But on the other hand, their very presence adds to the influx of highly skilled workers, increases demand and helps to expand the whole tech ecosystem in each area. In terms of geography, we can’t overlook the importance of Canada’s proximity to the United States, which has always had a big impact on how our business world operates here and how we see our relationship with other countries. Because we have access to such a huge trading partner, we are naturally an export focused country, with the US always the first choice.
Peter Matutat, National Leader for Technology and Life Sciences at BDO Canada LLP, works with his team to best serve clients in the technology space, many of them from overseas. Harry Chana is National Tax Technology leader for BDO Canada, and International Tax Services Leader. His main practice area is with tech companies expanding either into Canada or expanding outside of Canada, and looking at tax efficient structuring on companies that are expanding globally.
WHAT ARE THE ADVANTAGES OF CANADA AS A PLACE FOR A TECH SCALE-UP TO CONSIDER EXPANDING INTO? We have a number of clients who move into Canada from other countries, and I’m always amazed by the ease with which they can get set up in Canada. It’s a very business-friendly environment, and with good advice, companies can be guided through the necessary process of ground-floor operational items – such as incorporation, tax registration, establishing the right legal structure, workers’ compensation board registrations and so on – in a remarkably painless way. And then they’re basically good to go! Another big incentive for firms looking to move into Canada is the R&D programme, which is invaluable for tech companies because there’s almost always IP involved. If you have people carrying out some type of design, development or coding activity, then there’s every likelihood that IP is being generated, which raises the possibility of tax credits and incentives. A lot of those credits have cash value even though you’re not taxable, so Canada is very lucrative for businesses from that perspective. Over recent years, the Canadian federal and provincial authorities have worked hard to create a positive business environment that is very open to overseas companies. A range of incentives and investments have been introduced to encourage companies into Canada, not just via tax incentives but also in immigration policy and encouraging large tech companies to come to Canada, around which a rich ecosystems of partners and suppliers has developed. All of this has really helped to ensure that we have the right bench strength in Canada to really increase our tech presence.
CANADA OFFERS A RICH POOL OF TECH TALENT
Made with FlippingBook HTML5