CANADA
Canadian Corporations are the most suitable option for Non Residents and we recommend incorporation in the Providences of New Brunswick and British Columbia. The advantages of Canadian Corporation are the following:
- Highly prestigious Canadian legal entity
- No restrictions on the residency of directors
- Availability of one man corporation, when one individual is shareholder, director, president, secretary and treasurer of the corporation.
- No requirements of a minimum authorized capital
- No restrictions on issued capital
- No withholding tax on directors’ fees and salaries paid to non resident directors, officers and employees, when they work outside of Canada.
- All directors’ fees and salaries paid to non residents are deductible from the corporate taxable income.
Below we analyze the following issues relating to Canadian incorporations:
- Corporate issues
- Tax Issues
- Double Tax Treaty between Canada and Ukraine
- Costs
CORPORATE ISSUES
The Canadian corporations in New Brunswick and British Columbia are limited liability companies incorporated under Canada Business Corporations Act.
The main requirements for a Canadian corporation to be fully operational and substance is to have at least one President, Secretary and Treasurer and a minimum of one director and one shareholder. It must have registered office in Canada and submit each year the required tax return.
The proposed name of the Corporation should include a distinctive, descriptive, and legal elements. Available options for the legal element: Limited, Incorporated, Corporation, Limitee, Ltd., Inc., Corp., Ltee. Example McDonald Engineering Limited. Restricted words are ones that may be considered to be misleading and include for example “bank, “trust”, “insurance”, “trust”, “stock exchange”, etc.
A minimum of one shareholder is required. Residents of any country, individuals and legal entities may be shareholders of Canadian corporations.
The corporation can issue unlimited number of common shares without nominal or par value. Such structure gives great flexibility. Corporate directors may issue any number of shares for any consideration in the future. For example, corporate directors may issue $100,000 shares for the total amount of $100. Or they may decide to issue the same number of the shares for the total amount of $100,000.
Director must be an individual at least 19 years old, of sound mind (mentally competent), not in a status of bankrupt and not convicted of an offence involving fraud under the criminal code of any jurisdiction. A resident of any country may be appointed as Director. A minimum of one director is required. Officers must be individuals, who are residents of any country. Positions of president secretary and treasurer are mandatory for each corporation. One individual may be appointed as director, president, secretary and treasurer.
An annual general meeting is required and it could be in any place inside or outside of Canada.
Each Canadian corporation must have a registered office address in Canada.
The time schedule for the incorporation of Canadian Corporations in Providences of New Brunswick and British Columbia is 2 to 3 business days. Certification of corporate documents by the New Brunswick and British Columbia governments takes 5 to 7 business days.
TAX ISSUES
Combined corporate income tax rate including federal and provincial components is 25%. Each Canadian corporation is required to file its corporate income tax return annually. The return must be filed in 6 months from the corporate fiscal year end. Income tax is payable in 2 months from the corporate fiscal year end. Corporations with zero taxable income or losses are not required to pay income tax, but they must file the corporate income tax return in time.
DOUBLE TAX TREATY BETWEEN CANADA AND UKRAINE
The withholding tax is 5% if a shareholder is a legal entity with 20% of voting shares and 15% in all other cases.
