Canadian Manufacturing

Canada world’s most competitive business tax environment: KPMG

Nation's business tax costs come in 46.4 per cent lower than U.S., according to report

June 17, 2014  by Canadian Manufacturing Staff

TORONTO—Advisory firm KPMG LLP has declared Canada the most competitive business tax nation globally, with its manufacturing sector ranking second once again for tax competitiveness.

Canada’s top ranking is mainly due to its low effective corporate income tax policy, moderate labour costs and harmonized sales taxes, according to the report.

The United Kingdom and Mexico ranked second and third, respectively, while the United States came in fifth place.

As a total, Canada’s business tax costs come in 46.4 per cent lower than the U.S.


“This year’s report demonstrates that once again Canada provides an attractive business tax climate,” Elio Luongo, Canadian managing partner of tax services with KPMG, said in a release.

“Our corporate tax policies ensure Canada remains a viable option and desirable location for businesses looking to locate or expand their operations.”

Canada’s tax costs for the manufacturing sector ranked second overall globally behind only Mexico, with a 34.5 per cent tax cost advantage versus the U.S.

The nation’s average total labour cost per employee came in at US$89,038—third overall out of the 10 countries measured—well ahead of the U.S., with a total labour cost of US$102,249 per worker.

Mexico ranked first overall by a country mile, with an average total labour cost per employee of US$40,648.

Average total labour cost is a combined measure of salary or wage, and statutory and benefit plans as percentages of total payroll.

The tax report is a supplement to KPMG’s Competitive Alternatives report, where Canada ranked second overall for the lowest cost of doing business globally.

The report, which uses the U.S. as a baseline, pegged the cost of doing business in Canada at 7.2 per cent lower than its neighbour to the south.

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