Starting a business in
🇨🇦Canada
Checked November 4, 2026 · How we score
Corporate tax
15%
Top income tax
53.5%
Setup from
$700
all-in, first year
Time to form
3 days
can be done remotely
Taxes in Canada
| Corporate income tax | 15% 15% federal general rate plus provincial rate (8%–16%), giving a combined general rate of roughly 23% (Alberta) to 31% (Nova Scotia), about 26.5% in Ontario. Canadian-controlled private corporations pay a small-business rate (roughly 9%–12% combined) on the first C$500,000 of active business income. SR&ED credits refund up to 35% of qualifying R&D for CCPCs. |
|---|---|
| Personal income tax (top) | 53.5% Top combined federal and provincial marginal rate about 48%–55% (Ontario 53.53%, Quebec 53.31%, Alberta 48%); federal top rate 33%. Residents are taxed on worldwide income. |
| Tax system | Worldwide income |
| Capital gains tax | 26.8%50% of gains are taxable at marginal rates (about 27% effective at the top Ontario rate). The proposed increase of the inclusion rate to two-thirds was cancelled in March 2025. |
| Dividend withholding (non-residents) | 25% |
| VAT / GST | 5% |
| Social security | GST 5% federal; HST 13%–15% in participating provinces; Quebec QST 9.975%; BC/Manitoba/Saskatchewan PST. Employer pays CPP/QPP and EI contributions on payroll. |
Forming a company in Canada
| Usual entity | CBCA federal corporation or provincial corporation (e.g. Ontario, BC, Alberta) |
|---|---|
| Minimum capital | None |
| Setup cost (all-in) | $700–$3,000 |
| Annual running cost | $1,500–$5,000 |
| Time to incorporate | 3 days |
| Form remotely as a foreigner | Yes |
| Local director required | No |
| Local address required | Yes |
| Owners on public register | Yes |
| Statutory audit for small companies | No |
| Business banking for non-residents | Hard |
Residency and visas
Canada has no digital nomad visa or investor golden visa. Routes for founders include Express Entry, provincial nominee programs and the Start-up Visa (a designated organization commitment is needed; processing is slow and annual caps have limited intake). Visitors may work remotely for foreign employers short term but not run a Canadian business locally.
| Digital nomad visa | No |
|---|---|
| Golden visa | No |
| Ease of residency for founders | 4/5 (1 = easiest) |
Special tax regimes
Small business deduction (CCPC)
Canadian-controlled private corporations pay roughly 9%–12% combined federal/provincial tax on the first C$500,000 of active business income. Non-resident control disqualifies a company from CCPC status.
SR&ED tax credits
Scientific Research and Experimental Development credits refund up to 35% of qualifying R&D spending for CCPCs, making Canada attractive for deeptech and software teams.
Start-up Visa
Pathway to permanent residence for founders backed by a designated VC fund, angel group or incubator; requires a letter of support and language proof.
Pros and cons
Why founders pick Canada
- Top-tier legal system and credibility with banks and investors
- Generous R&D credits and a small-business rate for CCPCs
- Treaty network and proximity to US markets
- Federal incorporation online in about a day
Watch out for
- High combined corporate and personal tax compared with offshore or territorial hubs
- A Canadian registered office and local compliance (T2, GST/HST) are required
- Federal individuals-with-significant-control register is public
- Business banking is hard for non-residents without local presence
Best for: Deeptech and software startups using SR&ED credits · Founders seeking Canadian immigration alongside a company · Companies selling to Canadian and US enterprise customers
Canada: common questions
Can a non-resident incorporate a company in Canada?
Yes. Since 2021–2022 the resident-director requirement was removed for CBCA federal corporations and for most provinces such as Ontario and Alberta, so a foreigner can incorporate online. A Canadian registered office address is still required, and a company managed and controlled from Canada becomes a tax resident.
What is the corporate tax rate in Canada?
The federal general rate is 15%, and provinces add 8%–16%, so the combined rate is roughly 23%–31% (about 26.5% in Ontario). Qualifying small businesses pay about 9%–12% on the first C$500,000 of active business income.
Does Canada have a digital nomad visa?
No. Visitors can usually work remotely for a foreign employer for short stays under visitor status, but there is no dedicated nomad visa. Longer stays require a work permit or immigration program such as Express Entry or the Start-up Visa.
Is there withholding tax on dividends paid to non-residents?
The domestic rate is 25% on dividends paid to non-residents, reduced by tax treaties, commonly to 5%–15% (for example 15% under the US treaty, 5% for qualifying corporate holders). Interest between arm's-length parties is generally exempt.
Is a Canadian company good for a foreign founder?
It suits founders who will operate in Canada or want its R&D credits and credibility. For purely online businesses owned from abroad, lower-tax jurisdictions are cheaper, because a Canadian company managed from Canada pays full Canadian tax.
Sources
- Canada Revenue Agency: Corporation tax rates
- Corporations Canada: Incorporating a federal business
- PwC Worldwide Tax Summaries: Canada
Similar countries
Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.