Foreign Investment in Canada

foreign investment in Canada

Canada's main advantages for foreign investments are a qualified workforce, a welcoming business environment and unparalleled market access. It is one of the most dynamic economies in the world, with a market of thirty million consumers and sophisticated infrastructures, as well as a very modern transportation network.

Billions of dollars of foreign investments are made in Canada each year. The USA has invested 1.6 trillion dollars between 2010-2015 out of a total inward stock totalling 3.2 trillion dollars over the same period.

Main Foreign Companies in Canada

The main foreign companies in Canada are General Motors, Ford, Daimler Chrysler, Exxon Mobil (Imperial Oil), Chevron Texaco, ConocoPhillips, Bank of America, Home Depot (inglés) and Wal Mart.

Foreign investment in Canadian industry 2015

According to the United Nations Conference on Trade and Development (UNCTAD) 2015 World Investment Report, Canada ranks among the ten largest foreign investment recipients, largely thanks to its attractive business environment, giving it a fourteenth ranking out of the 189 countries in the 2016 “Doing Business” report issued by the World Bank.

In 2015, just 10 countries provided Canada with 88 percent of its foreign investments. Half of the 361 billion dollars was invested by the United States and the rest by Netherlands, Luxembourgh, United Kingdom, Switzerland, China, Brazil, Japan, Germany and France. Foreign investment to Canada grew by 6 percent from 2013 to 2014 (a 40 billion dollar increase), but fell by sixteen percent in 2015 due to a slump in the primary sector and a reduction in intra-company loans, particularly for energy and mining companies.

The largest share of foreign investments went to the manufacturing industry (215 billion dollars) of which sixty billion dollars was invested in petroleum and coal manufacturing. Of the other industries who received foreign investments, mining, oil and gas received 152 billion dollars; finance and insurance ninety billion dollars and wholesale trade sixty billion dollars. The highest growth, at forty-five percent, was in the information and culture industry. Wood product manufacturing saw a sharp decrease of seventeen percent, a loss of over six-hundred million dollars.

Government Measures for foreign investment

Total business tax costs in Canada are by far the lowest among the G7 countries. Canada also offers the lowest business costs in the G7 for research and development intensive sectors. In 2015, Canada amended the Investment Canada Regulations, which changes how the value of an acquisition of a Canadian enterprise is assessed for acquisitions by foreign private investors. Restrictions on foreign investments differ by province, but are largely confined to the purchase of land and to financial services.

At the level of both federal and provincial governments, investments are encouraged especially in zones affected by large-scale unemployment or when economic development is slow. The privileged sectors are those of processing, life sciences, advanced technologies, agri-food, plastics, and any sector with a strong potential for creating employment.

Federal incentives for foreign investment

The Canadian government offers several programs of fiscal incentives for investors. The incentives are designed to advance broader policy goals, such as boosting research and development or promoting regional economies.

These are not specifically aimed at promoting or discouraging foreign investments in Canada:

  • Canadian Manufacturing and Processing Profits
  • Reduced Rate of Corporate Tax
  • Investment Tax Credit
  • Flow-Through Share Program
  • Canadian-Controlled Private Corporation
  • Federal Corporate Tax Rate Reductions.

Sectors where investment opportunities are fewer

Several sectors are provincial or federal monopolies in Canada, among others: health, alcohol imports, energy, road and education systems. All manufacturing sectors, particularly the clothing industry and furniture making are currently in decline.