Vancouver, Montreal, Toronto place in top 10 with lowest business tax
costs out of 35 global cities
TORONTO, July 28 /CNW/ - Canada has the third lowest tax cost for
businesses among 10 countries studied by KPMG for a special report on tax in
Competitive Alternatives 2008, the firm's guide to international business
The report assesses the general tax competitiveness of 102 cities in 10
countries, focusing on 35 major cities with populations greater than 2
million, comparing the tax burden faced by companies, including income tax,
capital tax, sales tax, property tax, miscellaneous local business taxes and
statutory labour costs.
Mexico and the Netherlands came in first and second in the country
rankings, and Canada was third, followed by Australia, the US, the United
Kingdom, Japan, Germany, Italy and France.
"Canada has done well in reducing its federal corporate tax rates," says
Greg Wiebe, KPMG's Canadian Managing Partner, Tax. "But tax policy choices by
all levels of government can significantly affect our competitiveness. For
example, if the provinces follow the federal lead and reduce their rates as
well, Canada's advantage will be enhanced."
In the report's 35 major city rankings, Vancouver was fourth, Montreal
sixth and Toronto seventh. The top three cities are located in Puerto Rico and
The report compares the total tax cost between countries and cities using
a Total Tax Index score for each location expressed as a percentage of total
taxes paid by corporations in the US. A lower score is better since it means
lower tax costs for businesses.
By this measure, Vancouver, with a score of 75.2, compares favourably
with Seattle, its natural US counterpart, scored at 107.1.
A similar advantage is shown for Toronto (85.4) and Montreal (83.2)
compared to cities in the US eastern corridor, such as New York City (109.2)
and Philadelphia (101.9).
Although not included on the 35 large international cities list, other
Canadian cities such as Calgary (69.3) and Halifax (66.6) also compare
favourably with their US counterparts, such as Houston (104.1) or Boston
Montreal's top rank for R&D among international cities reflects the
province of Quebec's commitment to developing its R&D sector," says Bruno
Desautels, Tax Partner in KPMG's Montreal office.
The report also compares tax costs between industries, which vary widely.
In a breakdown by business sectors, Canada comes third in manufacturing,
scoring well at 87.1 compared to 100 for the US, with Vancouver, Toronto and
Montreal placing in the top 10 cities. For the services business sector,
Canada ranks second behind Mexico and, again, the three major Canadian cities
studied place in the top 10.
The greatest variations in industry tax costs between countries are in
the R&D industries, due to intense competition between countries to attract
more R&D business by offering more generous incentives. In this industry,
Canada comes second after the Netherlands, and Montreal, Vancouver and Toronto
rank first, second and third among the large international cities:
"These rankings reflect Canada's tax policy in this area and its efforts
to enhance its R&D incentives," says Greg Wiebe. "Despite these good results,
there's still room for improvement. A recent KPMG survey found that the R&D
program needs to be administered more effectively to ensure that companies can
benefit from it."
KPMG's Competitive Alternatives 2008 and its Special Report: Focus on Tax
are available on KPMG in Canada's Web site.
About KPMG in Canada
KPMG LLP, a Canadian limited liability partnership established under the
laws of Ontario, is the Canadian member firm affiliated with KPMG
International, a global network of professional firms providing Audit, Tax,
and Advisory services. Member firms operate in 145 countries and have more
than 123,000 professionals working around the world.
The independent member firms of the KPMG network are affiliated with KPMG
International, a Swiss cooperative. Each KPMG firm is a legally distinct and
separate entity, and describes itself as such.
KPMG in Canada's Web site is located at www.kpmg.ca
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