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Conducting Business in Canada

A number scenarios exist by which foreign businesses may seek to engage in work in Canada on a temporary or permanent basis. These may typically include situations in which the foreign company wishes to expore the Canadian market and negotiate with prospective customers; to engage in temporary projects in Canada based on short term agreements with customers; or to establish a division in Canada for the purpose of business expansion. Each scenario has different solutions, as well as different advantages and disadvantages.

Canadian Business Visitors

When a foreign company initially considers conducting business in Canada, there may be an exploratory stage, likely followed by stages during which that company engages in negotiations and potentially bidding with prospective Canadian customers or business partners. Such a company may wish to send a representative to Canada in order to engage in such work, or to attend meetings during which agreements are established.

Although Citizenship and Immigration Canada defines numerous classes of Business Visitors, those provisions that may apply in this case would generally prescribe a number of characteristics of the foreign worker for eligibility. For example, such an individual should remain in the employ of the foreign company with a principal place of business outside Canada, and his primary source of remuneration should derive from outside Canada. Also, the beneficiary of the services of such an individual should not be Canadian.

Business Visitors benefit from exemptions from the Canadian work permit requirement. However, this does not remove the necessity to document a clear and complete case for eligibility. In the absence of such, evidence of any type of work in Canada could result in the requirement of a work permit for Canada, even if an exemption may exist.

[More information on Canadian Business Visitors]

 

Temporary Work in Canada

It is not uncommon for foreign companies to engage in short-term contracts with Canadian companies or Canadian divisions of foreign companies. This may occur as the result of a successful bid for a project with a Canadian customer, or may occur as a result of a contract with another foreign company requiring work to be conducted on its behalf within Canada.

A foreign company that is successful in obtaining such projects in Canada may wish to engage in work on a temporary basis; that is, conducting the work as a foreign entity and departing Canada at such time as the work on that project is concluded. In this situation, this company may need to send one or more of its employees to Canada on a temporary basis in order to oversee and/or execute work on the project, with the intention of departing work once the project is complete. In such a situation, the company may not need to establish a registered business entity in Canada, and may elect to carry out such work entirely through its foreign operation.

[More information on Temporary Work and Permits]

 

Business Expansion into Canada

In some cases, due to expected long-term opportunities in Canada, or due to the presence of multiple ongoing projects, a foreign company may seek to expand its operations into Canada by registering a business entity and having more permanent operations.

The registration of the Canadian business may take several forms, and could include a Federal or Provincial Incorporation, a Limited Liability Partnership (LLP), or an Unlimited Liability Corporation. The decision on the best approach to registration, as well as decisions on share class structure, is best determined through discussion with a Canadian taxation expert, during which the goals and expectations of the business may be assessed in order to determine the suitable approach.

With a registered business entity, the foreign company may seek to establish commercial premises in Canada and may staff that with a combination of existing employees from abroad and new Canadian employees. International treaties such as NAFTA and GATS, as well as other provisions governing Significant Benefit to Canada may allow for the transfer of certain employees of the foreign company to the new Canadian division. Most commonly, this comes with the requirement that there is evidence that both divisions (foreign and Canadian) are engaged in substantive business operations. In the case of a new Canadian division, evidence of the likelihood of its engagement in substantive business operations may be more critical, however.

[More information on Temporary Work and Permits]

 

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