Registration of Partnership: Cost of Service
|Service Description||LP Ontario |
|LLP British Columbia |
(limited liability partnership)
|Set of partnership documents certified by a notary||✓||✓|
|Registered office address for 1 year||✓||✓|
|Nominee services, power of attorney||✓||✓|
|Legalization of documents in Latvia||✓||✓|
|Sending of documents (from jurisdiction and nominee partners)||✓||✓|
|Total cost||1990 $||1990 $|
|Annual maintenance||990 $||990 $|
|Nominee services including power of attorney||500 $||500 $|
EPC (Extra-Provincial Corporation)
|Ontario Extra-Provincial License (original and notarized copy)||✓|
|Registered office address in Ontario, agent’s services for 1 year||✓|
|Nominee services, power of attorney||✓|
|Legalization of documents in Latvia||✓|
|Sending of documents||✓|
|Total cost||1680 $|
|Annual maintenance||990 $|
|Notarization of a document||200 $|
|Legalization of documents in Latvia (additionally)||350 $|
|Legalization of documents in Canada||650 $ + consulate tariff|
|Document proving “good standing” (LP report /LLP summary / Corporate Profile Report), not legalized||250 $|
|Registration of Corporation||upon request|
|“Business Address” – reception of correspondence from any senders |
(registered office address serves for registration only and cannot be used for receiving correspondence)
|480 $ + sending of documents|
- Canada is a state situated to the north of the US and is the second largest territory in the world. Canada includes 10 provinces and 3 territories. The country’s capital is Ottawa. Official languages – English and French. National currency – Canadian dollar (CAD). Canada is a member state of G7, WTO, IMF, OECD, FATF, NAFTA, Commonwealth and other international organizations.
- Canada is one of the most developed countries with stable financial system and high level of income per capita. The country holds the sixth position in the economic freedom ranking according to The Heritage Foundation.
- The common law system prevails in Canada (except Quebec). The Canadian provinces have their own legislation (including corporate) with exception to matters under the federal jurisdiction.
- Сanadian companies have no tax heaven image and can be used as a well-respected instrument in international business.
- Canada is not a member of The Hague Convention of 5 October 1961 abolishing the requirement of legalization for foreign public documents (i.e. apostille is not available so the documents to be used abroad require consular legalization).
Forms of business incorporation in Canada
The legal forms of incorporation in Canada widely used in international business include:
- Limited Partnerships (LP)
- Limited Liability Partnerships (LLP)
- Extra-provincial corporations (EPC)
Limited Partnership (LP)
The main features of Canadian Limited Partnerships registered in Ontario:
- LPs are established under the Ontario Limited Partnerships Act 1990.
- LPs have no separate legal personality but have some its features (they can open bank accounts, make transactions with contract partners in the course of their business).
- LP requires minimum 1 general partner and 1 limited partner (natural person or legal entity of any residence). Foreign company may be appointed as general partner provided that it is registered in Ontario as an extra-provincial corporation. Foreign company may be appointed as limited partner without meeting this requirement.
- LP may be formed by one person being both general and limited partner.
- There are no requirements for the amount of partners’ contributions into LP. The contribution may be made in money or other property (but not services).
- General partners bear unlimited personal liability for LP’s obligations. The liability of limited partners is limited to the amount of their contribution into the partnership.
- LP must have an address in Ontario to receive official correspondence. The copies of the partners’ resolutions and of the partnership agreement must be kept in the registered office.
- No corporate income tax.
- No filing requirements for financial statements and tax return.
- All profit earned by the LP is to be distributed between the partners.
- Partners who are non-residents of Canada usually have no tax liability in Canada. The Canadian resident partner declares his part of profit earned as a result of LP’s activity as his personal income and pays the income tax. The non-resident partner does the same in the country of his tax residence.
Limited Liability Partnership (LLP)
- The British Columbia Partnership Act 1996 provides the option of registration of limited liability partnerships (LLP), wh ere the partners are equalized in limitation of their personal liability for obligations of partnership.
- In the same way as the LP, the Canadian LLP has no separate legal personality but has some its features (it can open bank accounts, make transactions with contract partners in the course of its business).
- Partners in LLP are not liable for the partnership’s obligations (like shareholders in a corporation). A partner however may be personally liable in case of his own negligent or wrongful act or omission (like directors in a corporation).
- LLP registered in British Columbia can engage in different types of business including trade in goods and rendering services, and is not limited only to self-regulated professions (legal, accounting and similar services) that is in place in other provinces.
- LLP must have an address in British Columbia.
- LLP must file annual report to the registrar within 2 months after expiration of each year from the date of its registration as LLP.
- The partnership must maintain the list of its partners which must be available for inspection and copying during working hours.
- Like the other types of partnerships, LLP is transparent for the tax purposes – the taxation is performed at the level of partners at the place of their tax residence.
Extra-Provincial Corporation (EPC)
Extra-provincial corporations (EPC) registration in Ontario:
- An opportunity for non-Canadian (i.e. foreign in relation to Canada) companies to get an extra-provincial license with a number of Ontario corporation and an address in Canada.
- Companies incorporated in any jurisdictions (including offshore) can register in Ontario as EPC.
- This license gives the right to set an office, open a bank account and run business in Ontario, as well as with other provinces of Canada and foreign companies (actually it is a kind of branch of foreign company in Canada).
- A foreign company must have a local agent (resident in Ontario) to be registered in Ontario.
- Canadian Extra-Provincial Corporation is not a separate Canadian legal person.
- Only the profit received in Canada is subject to tax. If the EPC operates only outside Canada, it has no tax liabilities in Canada (and no tax return is required). The bank account opened in Canada does not mean doing business in the country.
Corporations may be established under the laws of different provinces (e.g. Ontario, New Brunswick, British Columbia and others).
The main features of corporations registered in New Brunswick (under the Business Corporations Act, 1981):
- Ordinary legal entity, resident corporation subject to taxes.
- Director may be resident in any country. The minimum number of directors is 1.
- The minimum number of shareholders is 1 (natural person or legal entity of any residence).
- Corporation may consist of one person being shareholder, director and secretary.
- No requirements to the amount of authorized and issued capital.
- The name must be unique, include the descriptive element and the indication of its legal form (Limited, Ltd., Incorporated, Inc., Corporation, Corp., Ltee).
- Corporation must have an address in New Brunswick.
- Corporation must hold annual general meetings (may be held outside Canada).
- Corporation is subject to corporate income tax at a 27% rate (15% federal part + 12% at the province level of New Brunswick). Income less than CAD 500,000 is subject to provincial corporate tax at a reduced rate 4%.
- Corporations must file annual tax return within 6 months after the expiry of the tax period.
Taxation in Canada
- Canada is a jurisdiction with normal and high taxation.
- Some types of companies and partnerships can operate in tax-free regime.
- A corporation is resident in Canada if it is incorporated in Canada or if its central management and control is exercised from Canada.
- Worldwide income of Canadian resident corporations is subject to corporate income tax at the federal and provincial level.
|Provincial corporate tax||Provincial corporate tax|
|Province of Canada||Federal corporate tax||Reduced rate||Standard rate||Overall rate|
- Non-residents are taxed on certain types of income received from sources in Canada.
- Dividends, interest, royalties, certain rental payments and management fees paid by a Canadian resident corporation to a non-resident are subject to 25% withholding tax (unless the applicable double taxation treaty provides reduced rates).
- Canada has no foreign exchange control and restrictions imposed on repatriation of capital.
- Transfer pricing, thin capitalization and controlled foreign companies rules, as well as other anti-avoidance rules, are in place.
- Canada has signed around 90 bilateral treaties for avoidance of double taxation and 24 tax information exchange agreements with some offshore jurisdictions.
- The Convention between the Republic of Latvia and Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on Income and on capital was signed on April 26, 1995 and entered into force on December 12, 1995.
- Canada participates in the Convention on mutual administrative assistance in tax matters (amended by the Protocol 2010). Canada intends to start automatic exchange of financial account information from September 2018.