TORONTO: Canada has the second lowest tax cost for businesses among 10 countries, according to a KPMG report on tax.
The global consulting firm’s special report on tax in Competitive Alternatives 2010, includes its Special Report: Focus on Tax, which assesses the general tax competitiveness of 95 cities in 10 countries. It focuses on 41 major cities with populations greater than 2 million, and compares the total tax burden faced by companies, including income tax, capital tax, sales tax, property tax, miscellaneous local business taxes, and statutory labour costs.
Mexico was first in the rankings, Canada second and the Netherlands third, followed by Australia, the US, the US, Germany, Italy, Japan, and France.
Canada has moved up from third place in 2008’s special report on tax.
“Canada has done well in reducing both its federal and provincial corporate tax rates,” says Greg Wiebe, KPMG’s managing partner, Tax. “These changes plus the upcoming Harmonized Sales Tax (HST) in Ontario and BC contributed to Canada’s improved ranking in this year’s report.”
The report ranks 41 major international cities, with Vancouver ranking first, Montreal fourth, and Toronto fifth. The second- and third-ranked cities are located in Mexico.
The report also compares tax costs between industries, which vary widely. In a breakdown by business sectors, Canada comes second in manufacturing with a score of 67.7, compared to 100 for the US, with Vancouver, Toronto, and Montreal placing in the top five cities.
Tax costs in the R&D sector vary significantly from other sectors and the overall results due to the impact of tax incentives targeted to foster R&D activity. In this industry, Canada ranks second, after Australia. Montreal, Vancouver, and Toronto rank second, fourth, and seventh among the 41 large international cities.
Click here for KPMG’s Competitive Alternatives 2010 report and its Special Report: Focus on Tax.