Foreign investment growth in Canada
Invest in Canada promotes Canada as a top foreign direct investment destination. We work directly with global companies looking to set up operations, expand their business or combine forces with an existing company in Canada. Their reasons for choosing Canada are many.
Foreign investment in Canada reached $67.2 billion in 2019, at a time when investment in other countries was declining. It continued to exceed the 10-year annual average throughout 2019.
Canada has become a top investment choice for global companies. Canada is second only to the U.S. and outranks the U.K., Australia, China and 25 other countries in the 2020 Kearney Foreign Direct Investment Confidence Index.
#1 Lowest marginal effective tax rate in the G7
1.5 billion consumers through 14 trade agreements
5 Innovation Superclusters
Why foreign investment in Canada matters
Canada’s long-term growth and prosperity depends on our competitiveness in global markets. Foreign direct investment creates jobs, provides new capital to help the economy grow, encourages innovation and links Canadian firms to global supply chains. This allows us to export Canadian goods and services more easily, giving us access to billions of consumers outside of our borders.
Why investors choose Canada
The Canadian economy is diverse and inclusive and is ranked #1 in the world for macroeconomic stability. We have an established and expansive infrastructure, strong cybersecurity and a stable political climate. We have the most educated workforce in the world, a top-tier university system and immigration policies that allow us to attract students and highly skilled workers from around the globe. We are well-known for our excellent quality of life and we consistently rank among the most peaceful countries in the world.
Ease of doing business
Canada ranks 23 out of 190 countries for ease of doing business in the Doing Business Report by the World Bank. This includes rankings in categories including starting a business, trading across borders and getting credit.
For foreign investors, setting up operations in Canada can mean important cost savings over other countries:
Lowest tax rate on new business investment
At 13.7%, Canada has the lowest marginal effective tax rate out of all other G7 nations. This metric helps estimate how new investments are taxed and gives an idea of a country’s overall tax competitiveness.
Competitive operating costs
The cost of doing business in Canada is lower than in other investment destinations. When compared to high technology firms established in the U.S., it’s more economical to run a tech firm in Canada. Canada also boasts lower real estate costs and the value of the Canadian dollar makes our highly skilled workforce more affordable, including in the tech sector.
Tax credits and other programs
Governments at all levels in Canada – from municipal to provincial/territorial and federal – offer a range of tax credits and other programs to encourage investment in Canada. Invest in Canada works closely with investors to connect with these opportunities.
The Government of Canada’s Scientific Research and Experimental Development Program is Canada’s largest R&D tax credit and incentive program. Administered by the Canada Revenue Agency, the program provides over $3 billion in tax incentives to over 20,000 claimants annually to conduct research and development (R&D) in Canada.
“Canada offers a stable, predictable jurisdiction and much more, with strong traditions in mining and a strong economy based on consistent economic policies. Canada has a large human resource base with experience in the mining sector as well as high quality professionals to support our business. Choosing Canada as the location for our project was an easy choice.”Investment location: Selkirk First Nation territory, Yukon
Innovation and growth programs
Canada has a rich, multi-sectored innovation ecosystem that includes business start-up programs, incubators, universities, research centres, innovation labs and others working together to make Canadian companies and organizations leaders in their fields.
Several programs support the Canadian innovation ecosystem, including:
Strategic Innovation Fund
The Strategic Innovation Fund supports large-scale transformative and collaborative projects that promote the long-term competitiveness of industries in Canada. It aims to encourage R&D, facilitate the expansion of firms in Canada, and attract and retain large-scale investments to Canada. Companies can apply for a minimum contribution of $10 million in funding for a proposal with total costs of at least $20 million. The program also includes competitive calls for government priorities. To date, the program has provided $2.3 billion in contributions.
Pan-Canadian Artificial Intelligence (AI) Strategy
The Pan-Canadian Artificial Intelligence (AI) Strategy makes Canada the first country to release a national AI strategy. With over $125 million in funding, the strategy brings together educational institutions, tech companies and researchers to develop research and global thought leadership on the economic, ethical, policy and legal implications of AI. By prioritizing AI in Canada, the strategy allows global companies to tap into our AI pool, leverage our research capabilities and partner with others on new project development.
Innovation Superclusters Initiative
Canada’s Innovation Superclusters Initiative is a $950 million business-led initiative that connects organizations and hubs in Canada’s innovation ecosystem. Through a small number of high-value, strategic investments, the initiative is co-investing in proposals with industry to strengthen Canada’s most promising industries: advanced manufacturing, digital technology, artificial intelligence, agriculture and ocean sciences.
Companies that choose Canada can also benefit from favorable provincial and municipal incentives.
“Canada’s leadership in new economies like cyber and AI, combined with the proactive role of the government in enabling innovation opportunities, is very attractive for us. Canadian employees collaborate extremely well, drive innovation and have a strong awareness of global cultures and needs which helps in rolling out products and solutions into the international market.”Investment location: Fredericton, NB
Canada as a gateway to the world
Canada is the only G7 country that has established free trade agreements with every other G7 country. With a total of 14 trade agreements globally, Canada offers investors preferential access to more than 50 markets. This offers the potential to reach over 1.5 billion consumers with a combined GDP of nearly US $50 trillion. Here are some notable examples:
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) makes Canada the only investment destination in the Americas to offer access to all EU Member States.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) gives companies operating in Canada enhanced access to one of the largest trading blocs in the world, which includes key markets in the Asia-Pacific region.
The Canada-United States-Mexico Agreement (CUSMA) entered into force on July 1, 2020. This new agreement, which replaces NAFTA, reduces red tape at the border and supports a seamless trade experience throughout North America.