Vancouver is the second most competitive major city – defined as those with a population of two million or more – when it comes to business taxes, according to a KPMG report released June 17.
Overall, Canada is the most competitive country in the world in terms of its business tax environment.
The country’s low effective corporate tax policy, moderate statutory labour costs and harmonized sales taxes nationwide contributed to its ranking.
“Our corporate tax policies ensure Canada remains a viable option and desirable location for businesses looking to locate or expand their operations,” said Elio Luongo, KPMG’s Canadian managing partner, tax.
The study compared the total tax costs for several countries and cities around the world. Each region was assigned a total tax index (TTI) figure, which is a measure of the total corporate taxes paid expressed as a percentage of total taxes paid by corporations in the United States. The U.S. has a benchmark TTI of 100.0.
The taxes included in the analysis were corporate income taxes, property taxes, capital taxes, sales taxes and statutory labour costs (payroll-based taxes).
Vancouver’s TTI is 54.5, which means tax costs for businesses in the city are 45.5% lower than the U.S. average.
Toronto was the top city globally at 51.6, or 48.4% lower than in the U.S. Vancouver was the top city in Canada in 2012, but fell behind Toronto in 2014.
“This change in ranking is due to several factors, including B.C.’s corporate tax rate increase from 10% to 11%, the final reversion from HST to PST and the elimination of the B.C. industrial property tax credit (which provided a partial exemption from school taxes for industrial property),” KPMG said in a release.
When all cities are included irrespective of their sizes, Edmonton is ranked as the most tax-competitive city in Canada, with a score of 42.7.
Canada’s TTI is 53.6, which is 46.4% lower than in the U.S. This is followed by the United Kingdom (66.6, or 33.4% lower than in the U.S.), Mexico (70.2, or 29.8% lower than in the U.S.) and the Netherlands (74.5, or 25.5% lower than in the U.S.). The United States came in fifth overall.
Infographic source: KPMG
A full copy of the report can be found here.