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Canada: Market Profile

Picture: Canada factsheet
Picture: Canada factsheet

1. Overview

Canada advances its ideals of stability, sustainable prosperity, and economic inclusion through its partnership with the World Bank Group. Since 1945, Canada and the Bank Group have worked together to end poverty and create a world based on sustainable development. Canada is a founding member of the World Bank and plays an important role in influencing its development priorities. Over 60% of Canada's official development assistance to international financial institutions goes to the World Bank Group. Until recently, Canada's healthy banking and financial system, plus continued growth in non-commodity export-related industries aided by a weak Canadian dollar, has lent support to domestic business and consumers amid soft crude oil prices and weak investment in the oil and gas sector. Looking ahead, while the Canadian economy is expected to strengthen in line with the stronger US economy and the stabilisation of commodity prices, the end of the era of ultra-low interest rates, plus uncertainties stemming from NAFTA renegotiation and the US’s post-QE policies and tax reform will likely cloud the country's growth ahead.

Source: Fitch Solutions

2. Major Economic/Political Events and Upcoming Elections

May 2015
Parliament passed an anti-terror law gave its intelligence agency expanded powers to improve surveillance at home and abroad and made it easier for police to detain suspects without charge.

October 2016
Canada signed a free trade agreement with the European Union (EU).

August 2018
Saudi Arabia froze all trade with Canada.

Source: BBC country profile – Timeline, Fitch Solutions

3. Major Economic Indicators

Graph: Canada real GDP and inflation
Graph: Canada real GDP and inflation
Graph: Canada GDP by sector (2017)
Graph: Canada GDP by sector (2017)
Graph: Canada unemployment rate
Graph: Canada unemployment rate
Graph: Canada current account balance
Graph: Canada current account balance

e = estimate, f = forecast
Source: International Monetary Fund, CIA World Fact Book
Date last reviewed: August 21, 2018

4. External Trade

4.1 Merchandise Trade

Graph: Canada merchandise trade
Graph: Canada merchandise trade

Source: WTO
Date last reviewed: August 21, 2018

Graph: Canada major export commodities (2017)
Graph: Canada major export commodities (2017)
Graph: Canada major export markets (2017)
Graph: Canada major export markets (2017)
Graph: Canada major import commodities (2017)
Graph: Canada major import commodities (2017)
Graph: Canada major import markets (2017)
Graph: Canada major import markets (2017)

Source: Trade Map, Fitch Solutions
Date last reviewed: August 29, 2018

4.2 Trade in Services

Graph: Canada trade in services
Graph: Canada trade in services

e = estimate
Source: WTO
Date last reviewed: August 21, 2018

5. Trade Policies

  • Canada has been a WTO member since January 1, 1995 and a member of GATT since January 1, 1948. Canada maintains a relatively liberal trade regime. There are no foreign exchange restrictions, and import licenses are only required for a limited number of goods. Imports are generally subject to import duties. To enhance the productivity and boost the overall competitiveness of local businesses, Canada has become the first G-20 economy to eliminate all remaining tariffs on manufacturing inputs, of which about 76% are textiles items and the remainder includes chemicals, plastics and articles, and certain articles of wood, glass, aluminium and graphite, and machinery and equipment. Duties on 1,541 tariff lines were eliminated on March 5, 2010, while duties on an additional 381 tariff lines were phased out over a five-year period and removed altogether by 2015.
  • On November 27, 2013, the Government of Canada launched an updated foreign policy and trade plan, entitled the Global Markets Action Plan (GMAP) as a means to encourage market diversification while concentrating its efforts on the markets that hold the greatest promise for Canadian business. Under the Plan, 20 emerging markets and 22 priority sectors have been highlighted with strong competitive advantages or dynamic growth opportunities for Canadians, including aerospace, agriculture and processed foods, education, information and communications technology, life sciences, sustainable technologies and transportation with regard to Hong Kong.
  • The importation of certain commodities is, however, tightly controlled. Examples of regulated goods include: food products; drugs and medical devices; hazardous products; some offensive weapons and firearms; endangered species and motor vehicles. Import licenses are required for items regulated under the Export and Import Permits Act. The Act lists various agricultural products (poultry, eggs, and dairy products), a number of textile and clothing items, and certain steel products.
  • Duties are assessed on the transaction value (the price actually paid or payable for the goods), including commission, brokerage, packing, royalties and transportation. Hong Kong and China origin goods are eligible for the preferential tariffs under the Canadian General Preferential Tariff (GPT) Scheme.
  • A provincial sales tax (PST) is assessed on all imports to Saskatchewan (5%), British Columbia (7%), Manitoba (8%) and Quebec (9.975%). Additionally, a broad-based value-added sales tax, known as the goods and services tax (GST/HST), is levied at 5%, 13% (New Brunswick, Newfoundland and Labrador, and Ontario), 14% (Prince Edward Island) and 15% (Nova Scotia), effective since April 1, 2013. In addition, excise duties and taxes are charged on goods such as spirits, wine, beer, tobacco products, fuel-inefficient vehicles, automobile air conditioners and certain petroleum products.
  • Canada may impose anti-dumping (AD) duties on imports considered to be priced less than the 'normal' price charged in the exporter's domestic market and caused material injury to the concerned industry in Canada. Furthermore, if a country is found to be unfairly subsidising its exporters, Canada is authorised to impose a countervailing (CV) duty equal to the amount of the subsidy expressed as a percentage of the export price of the goods. These duties remain in place for five years and can be renewed for additional terms of five years.
  • Currently, Canada imposes AD and/or CV duties on several imports from the Chinese mainland, including aluminium extrusions; as well as various carbon, copper and alloy steel product lines, photovoltaic modules and laminates; piling pipe; polyethylene terephthalate resin; pup joints; seamless casing; silicon metal; thermoelectric coolers and warmers and unitised wall modules. Meanwhile, Canada has also imposed on imports of certain concrete reinforcing bar from Hong Kong a definitive AD duty of 108.5% (except one company with individual rate of 54%) for a period of five years from May 4, 2017.
  • Canada may also invoke a specific safeguard against imports from China if such imports are being imported in such increased quantities or under such conditions as to be a significant cause of market disruption to domestic producers of like or directly competitive goods in Canada. The first case was initiated in July 2005 and involved self-standing barbecues for outdoor use from China. In that instance, the Canadian International Trade Tribunal (CITT) allegedly found evidence of market disruption and established a 15% safeguard duty for a period of three years. The provisions relating to safeguard inquiries specific to China under the Protocol on the Accession of the People's Republic of China to the World Trade Organization expired on December 11, 2013.
  • Canada requires bilingual labelling (English and French) for most products. Bilingual designation of the generic name on most pre-packaged consumer products is required under the federal Consumer Packaging and Labelling Act. Under this Act, the product identity declaration, net quantity declaration and dealer's name and principal place of business must appear on the package/label of consumer goods sold in Canada. In addition, Textile Labelling and Advertising Regulations have been amended to allow the use of lastol and PLA (or polyactic acid) as generic fibre names in textile and apparel labels in April 2010.
  • The agency responsible for inspection of imports, Canada Customs and Revenue Agency, also requires an indication of the country of origin on several classes of imported goods. Goods not properly marked will not be released from Canada Customs until suitably marked. In general, environmental claims that are ambiguous, misleading or irrelevant, or that cannot be substantiated, should not be used.
Source: WTO - Trade Policy Review, Fitch Solutions

6. Trade Agreement

Multinational Trade Agreements

Provisionally Active

The Comprehensive Economic and Trade Agreement (CETA): The CETA is an agreement between the EU and Canada. CETA was signed in October 2016 and ratified by the Canadian House of Commons and EU Parliament in February 2017. However, the Agreement has not been ratified by every European state and has only provisionally entered into force. CETA is expected to strengthen trade ties between the two regions, having come into effect in 2016. Some 98% of trade between Canada and the EU will be duty-free under CETA. The agreement is expected to boost trade between partners by more than 20%. CETA also opens up government procurement. Canadian companies will be able to bid on opportunities at all levels of the EU government procurement market and vice-versa. CETA means that Canadian provinces, territories and municipalities are opening their procurement to foreign entities for the first time, albeit with some limitations regarding energy utilities and public transport.

Under Re-Negotiation

The North American Free Trade Agreement (NAFTA): The NAFTA was originally signed by Canada, the US and Mexico and took effect in January 1994. However, in 2018 the US has begun to re-negotiate the terms of NAFTA. Difficult trade negotiations with the US over NAFTA could thus result in significantly altered trade terms.

Under Negotiation

Canada is undertaking discussions of bilateral or multilateral FTAs with China and MERCOSUR in order to expand market access.

Sources: WTO Regional Trade Agreements database

7. Investment Policy

7.1 Foreign Direct Investment

Graph: Canada FDI stock
Graph: Canada FDI stock
Graph: Canada FDI flow
Graph: Canada FDI flow

Source: UNCTAD
Date last reviewed: August 21, 2018

7.2 Foreign Direct Investment Policy

  1. With few exceptions, Canada offers full national treatment to foreign investors within the context of a developed open market economy operating with democratic principles and institutions. Canada reviews investments under the Investment Canada Act (ICA). Foreign investment is prohibited or restricted in several sectors of the economy. Investment in specific sectors is covered by special legislation. Foreign investment in the financial sector is administered by the Finance Department. Investment in any activity related to Canada's cultural heritage or national identity is administered by the Heritage Department. Foreign ownership of Canadian telecommunications firms is governed by the Telecommunications Act, while the Broadcast Act governs foreign investment in radio and television broadcasting.

  2. Investment relations with other states are governed by Foreign Investment Protection Agreements (FIPAs). These are bilateral treaties that promote and protect foreign investment through a system of legally binding rights and obligations. Canada has 30 FIPAs in force with countries in Central Europe, Latin America, Africa, and Asia. Canada is actively pursuing FIPAs with ten countries including India, Pakistan, and Kosovo. Canada views China as an increasingly important trade and investment partner and ratified a FIPA with China in September 2014. Canada signed a FIPA with Hong Kong in February 2016 and with Burkina Faso and Guinea in 2015. In February 2016 Canada and the EU completed the legal review of the CETA. CETA was signed in October 2016 and ratified by the Canadian House of Commons and EU Parliament in February 2017. However, the Agreement has not been ratified by every European state and has only provisionally entered into force.

  3. On top of the Foreign Trade Zones - Marketing Program (FTZ-MP), one of four components of the Global Commerce Support Program and funding opportunities for businesses, the Invest Canada - Community Initiatives (ICCI) programme, as one of the many tools under GMAP, provides financial support to communities for their foreign direct investment initiatives and activities. More information on the investment environment and the relevant regulations can be found at Canadian Trade Commissioner Service.

  4. Foreign investment policy in Canada has been guided by the ICA since 1985. The ICA liberalised policy on foreign investment by recognising that investment is central to economic growth and key to technological advancement. The ICA provides for review of large acquisitions by non-Canadians and imposes a requirement that these investments be of 'net benefit' to Canada. For the vast majority of small acquisitions and the establishment of new businesses, foreign investors need only notify the Canadian government of their investment. Fewer than 10% of foreign acquisitions are subject to ICA review. The threshold for investments subject to ICA review for 2016 is CAD600 million for WTO Members. (Indirect control acquisitions by WTO Members do not have to be reviewed.) New regulations that come into effect on April 24, 2017 will implement revised review thresholds for WTO investors, other than SOEs, and will increase the review threshold to CAD800 million, and ultimately to CAD1 billion in 2019. Thereafter the review amount will be subject to indexation. Additionally, the time periods for the security review process will be increased from 130 days to 200 days. For non-WTO Members, the threshold remains at USD5 million for direct control and USD50 million for indirect control acquisitions.

  5. In 2015, Canada amended its National Security Review of Investment Regulations to provide the government with the flexibility to extend time periods for the review of investments that could be injurious to national security.

  6. Canada announced new SOE guidelines in December 2012, which included the statement that future SOE bids to acquire control of a Canadian oil-sands business will only be approved on an 'exceptional basis'. Canada altered the definition of an SOE in its 2013 Budget Implementation Bill to an entity or individual that is influenced directly or indirectly by a foreign government. The Bill also established a separate threshold review for SOE acquisitions of control, and allows Canada's Industry Minister to review minority SOE investments for the first time. SOE investments from WTO member countries over USD375 million are subject to review.

  7. Canada limits foreign ownership of Canadian air carriers to 25%. In addition, foreign interests may not control a Canadian air carrier. One Canadian airline has put a special procedure in place for foreign share-transfers which reclassifies its stock as variable voting shares. This allows non-Canadians to own more than 25% of the equity while reducing foreign voting rights and allowing the airline to remain Canadian with at least 75% of its voting interests owned and controlled by Canadians. The Canada-EU Aviation Agreement, signed in December 2009, envisions changes to Canadian legislation that will allow up to a 49% foreign stake in Canadian airlines, but they have yet to take place. A government review of the Canada Transport Act released in February 2015 recommended that foreign ownership limits for commercial airlines be increased to 49% to foster competition. Canada also passed an amendment to the Canada Transportation Act in March 2009 that provides the Governor in Council (appointed by the Governor General) with authority to increase foreign ownership of Canadian airlines to a maximum of 49%. The current government has not taken action on the recommendations of the review panel and the Governor in Council has not exercised his power to raise ownership limits to date.

  8. Regulatory reform in electricity continues in Canada in expectation that increased competition will lower costs of electricity supply. Province-owned power firms are interested in gaining greater access to the U.S. power market. Since power markets fall under the jurisdiction of the Canadian provinces, they are at the forefront of the reform effort. Several Canadian provinces have introduced initiatives to encourage the development and implementation of renewable sources of electricity. Canada continues to encourage additional foreign investment in its energy sector to develop its vast oil and gas resources. In Quebec, calls for tender for energy projects vary between 30% and 60% of local content.

  9. The requirement that bank ownership be 'widely held' with no more than 25% of its shares owned by a single shareholder is said to prevent ownership concentration without discriminating against foreign investors; however, Canadian influence is still exerted through certain requirements of the Bank Act: the head office of a bank must be located in Canada; shareholders' meetings are required to be held in Canada; two-thirds of the directors must be resident Canadians; the chief executive officer of the bank must ordinarily be resident in Canada; important corporate and transactional documents must be kept in Canada; certain administrative changes require ministerial approval.

  10. Generally foreigners cannot be majority owners of uranium mines.

  11. Canada amended the ICA in June 2012 to allow the Innovation, Science and Economic Development Minister (ISED, formerly Industry Canada) to publicly disclose why an investment proposal failed to satisfy the net benefit test, so long as disclosure will not harm the Canadian business or investor. Another amendment allows the Industry Minister to accept security of payment from an investor when a court finds the investor to be in breach of its ICA undertakings. Canada also introduced guidelines that provide foreign investors with the option of a formal mediation process to resolve disputes when the ISED Minister believes a non-Canadian investor has failed to comply with a written undertaking. In April 2015, the Act was amended to introduce the concept of 'enterprise value' as compared to 'asset value'. Asset value is based on the value of the assets according to the business' financial statements (book value) where enterprise value takes into account market value, debt and cash. As a result of the amendments, direct investments resulting in the acquisition of control of a Canadian business by non-state-owned, WTO investors are measured by enterprise value. In contrast, establishments of new businesses, direct investments resulting in the acquisition of control of a Canadian business by state-owned or non-WTO investors, and indirect investments by any investor are measured in asset value.

  12. The Investment Canada Act requires that foreign investment in the book publishing and distribution sector be compatible with Canadian national cultural policies and be of net benefit to Canada. Takeovers of Canadian-owned and controlled distribution businesses are not allowed. The establishment of new film distribution companies in Canada is permitted only for importation and distribution of proprietary products. Direct and indirect takeovers of foreign distribution businesses operating in Canada are permitted only if the investor undertakes to reinvest a portion of its Canadian earnings in Canada. The Broadcasting Act sets out the policy objectives of enriching and strengthening the cultural, political, social, and economic fabric of Canada. The Canadian Radio-television and Telecommunications Commission (CRTC) administers broadcasting policy. When a Canadian broadcast service is licensed in a format competitive with that of an authorised non-Canadian service, the commission can drop the non-Canadian service if a new Canadian applicant requests it to do so. Licences will not be granted or renewed to firms that do not have at least 80% Canadian control, represented both by shareholding and by representation on the firms' board of directors.

  13. Under provisions of Canada's Telecommunications Act, foreign ownership of transmission facilities is limited to 20% direct ownership and 33% through a holding company, for an effective limit of 46.7% total foreign ownership. Canada also requires that at least 80% of the members of the board of directors of facilities-based telecommunications service suppliers be Canadian citizens. Canada amended the Telecommunications Act in June 2012 to rescind foreign ownership restrictions on carriers with less than 10% share of the total Canadian telecommunications market. Foreign-owned carriers are permitted to continue operating if their market share grows beyond 10% provided the increase does not result from the acquisition or merger with another Canadian carrier. The policy change was part of the Canadian government's strategy to facilitate more competition in the telecom sector. Canada's three largest telecomm providers acquired the majority of spectrum licenses sold at its 700 MHz spectrum auction in February 2014, and the auction did not feature any new foreign buyers. In March 2015, Canada announced results of an AWS-3 spectrum auction in which 60% of the spectrum was set aside for new entrants. No foreign companies received spectrum in this auction. Canada held a 2500MHz spectrum auction on April 14, 2015 with Canadian companies winning all of the licenses offered. Incentives for investment in cultural industries, at both the federal and provincial level, are generally available only to Canadian-controlled firms. Incentives may take the form of grants, loans, loan guarantees, venture capital, or tax credits. Provincial incentive programs for film production in Canada are available to foreign filmmakers.

  14. Primary responsibility for property law rests with the provinces. Prince Edward Island and Saskatchewan put limitations on real estate sales to out-of-province parties. Government authorities can expropriate property after paying appropriate compensation. British Columbia began a 15% tax on foreign buyers of residential real estate in the Metro Vancouver area in August 2016. In early 2017, the province announced that foreign buyers with work permits would be exempt from the tax.

Sources: WTO - Trade Policy Review, the International Trade Administration (ITA), U.S. Department of Commerce

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
Any locationCanada has taken important steps in providing new trade advantages for investors. Canada's world-class investment environment is underpinned by the lowest overall tax rate on new business investment in the G-7, a duty-free tariff regime on imports of manufacturing inputs and machinery, the fact the Goods and Services Tax/Harmonized Sales Tax (GST/HST) is fully recoverable for most businesses and does not apply to exports, and many other complementary benefits found in FTZs around the world but with a key difference: Canada's duty and tax relief is geographically flexible. It can be enjoyed anywhere in the country.

In recent years, Canada has implemented a major new initiative that will eliminate tariffs on all manufacturing inputs by 2015 - the first country in the G-20 to offer a tariff-free zone for industrial manufacturers. Canada's initiative applies across the entire country, making Canada one large FTZ for firms importing manufacturing inputs.

Free trade in manufacturing inputs is an important source of competitive strength for businesses in Canada. By reducing the cost of importing key factors of production, tariff relief encourages innovation, enhances productivity, reduces customs compliance costs and eliminates the administrative burden of complying with various rules and regulations. The elimination of tariffs will reduce customs compliance costs, simplify the tariff structure and eliminate the administrative burden of complying with multiple rules and regulations. This makes Canada a tariff-free zone for industrial manufacturers and a more attractive place for investors.

In addition, investors who choose Canada will have the advantage of importing advanced machinery and equipment into Canada free of import duties. This reduces the import cost of advanced machinery and equipment, thereby realising productivity gains from efficient production.

Canada's geographically flexible approach is superior to efforts by other countries that focus on location-specific foreign trade zones by allowing businesses to choose the location that best fits their needs.
Other incentives (regional)Federal and provincial governments in Canada offer a wide array of investment incentives that municipalities are generally prohibited from offering. None of the federal incentives are specifically aimed at promoting or discouraging foreign investment in Canada. The incentives are designed to advance broader policy goals, such as boosting research and development or promoting regional economies. The funds are available to any qualified Canadian or foreign investor who agrees to use the monies for the stated purpose. The Province of Quebec officially re-launched its 'Plan Nord' (Northern Plan) in April 2015, a 20-year sustainable development investment initiative that is intended to harness the economic, mineral, energy, and tourism potential of Quebec's northern territory. Quebec's government created the 'Société du Plan Nord' (Northern Plan Company) to attract investors and work with local communities to implement the plan. Thus far, Plan Nord has helped finance mining projects in northern Quebec and began building the necessary infrastructure to link remote mines with ports.

The provincial government is actively seeking other foreign investors who desire to take advantage of these opportunities. Quebec holds an annual meeting of mining industry stakeholders, known as 'Quebec Mines', every year in November where it is possible to get more information about potential claims and the mining investment climate as a whole. According to the Fraser Institute, a Canadian public policy think tank, Quebec is ranked as the number 8 jurisdiction worldwide for mining investments. Quebec also seeks to attract foreign investment through its Maritime Strategy.

The province has designated 16 ports where maritime industrial zones will be developed or improved. The provincial government has pledged to invest CAD300 million annually for the next five years and intends to pursue this strategy until 2030. The plan aims to develop the St. Lawrence valley region and coastal Quebec by developing industrial zones near ports, supporting shipyards, modernising maritime tourism, and protecting the environment. Provincial incentives tend to be more investor-specific and are conditioned on applying the funds to an investment in the granting province. For example, Ontario's Jobs and Prosperity Fund provides US$2.5 billion over 10 years to enhance productivity, bolster innovation and grow Ontario's exports. To qualify, companies must have substantive operations (generally three years) and at least CAD10 million in eligible project costs. Alberta offers companies a 10% refundable provincial tax credit worth up to US$400,000 annually for scientific research and experimental development encouraging research and development in Alberta as well as Alberta Innovation Vouchers worth CAD5,000 to CAD50,000 to help small early-stage technology and knowledge-driven businesses in Alberta get their ideas and products to market faster.

Newfoundland and Labrador provide vouchers worth 75% of eligible project costs up to CAD15,000 for R&D, performance testing, field trials, and other projects. Provincial incentives may also be restricted to firms established in the province or that agree to establish a facility in the province. Government officials at both the federal and provincial levels expect investors who receive investment incentives to use them for the agreed purpose, but no enforcement mechanism exists.

Source: Fitch Solutions

8. Taxation – 2018

  • Value Added Tax: 5%
  • Corporate Income Tax: 15%

Source: PwC Tax Summaries 2018

8.1 Business Taxes

Type of TaxTax Rate and Base
Federal Corporate Income Tax Rate
Federal Capital Gains Tax Rate7.5%
Branch Tax Rate15%
Withholding Tax: Dividends and Interest25%
Royalties from patents, know-how, etc.25%
Branch Remittance Tax25%
GST, a value-added tax, applies to a broad range of goods and services5%
Harmonized Sales Tax, a value-added tax, applies to a broad range of goods and services in certain provinces15%

Source: PwC Tax Summaries 2018
Date last reviewed: August 29, 2018

9. Foreign Worker Requirements

9.1 Entry Visas

An individual who is not a citizen or permanent resident of Canada or a national from a designated country that is exempt from the visa requirement and who wishes to enter the country as a tourist, business visitor, student or foreign worker must obtain a Temporary Resident Visa through a consulate outside Canada before entering Canada. A foreign national who is exempt from the requirement to possess a travel entry visa (for example, most citizens of a European Union country, Australia and Japan) must first obtain an electronic travel authorization (eTA) before departing for Canada when arriving by air for visitor, temporary work or study purposes. An eTA is normally valid for five years or for the duration of the traveller's passport, whichever is shorter. The application and approval process is normally very fast for most travellers through the Immigration, Refugees and Citizenship Canada website, but must be completed before departure in order for the airline to allow the traveller to board the aircraft.

9.2 Skilled Workers

Canada launched several initiatives in past years including the Global Skills Visa, announced in November 2016, to address its skilled labour shortage, including through immigration reform, the inclusion of labour mobility provisions in free trade agreements, including the Canada-EU CETA agreement, and the Temporary Foreign Worker Program (TFWP). The TFWP is jointly managed by Human Resources and Skills Development Canada (HRSDC) and Citizenship and Immigration Canada (CIC) and is divided into two categories: the International Mobility Program (IMP), which primarily includes high skil/lhigh wage professions, and the TFWP which refers to primarily low skilled workers. The number of temporary foreign workers a business can employ is limited.

9.3 Business Visitors

An individual wishing to enter Canada as a business visitor generally must first secure a Temporary Resident Visa or, in the case of visa-exempt foreign nationals, an eTA. A foreign national may enter Canada as a business visitor, without obtaining a work permit, in certain limited instances. In general, these instances are limited to foreign nationals engaging in international business activities in Canada, without directly entering the Canadian labour market or providing services to a Canadian entity. Common circumstances in which a foreign national may enter Canada as a business visitor include the following:

  • Foreign nationals attending business meetings or conferences.
  • Foreign nationals seeking to purchase Canadian goods or services or receiving training.
  • Foreign nationals giving or receiving training with a Canadian parent or subsidiary of the corporation that employs the foreign national abroad.
  • Foreign national sales representatives who come to Canada to sell goods (or services) manufactured outside Canada, if they do not sell to the general public.

9.4 Work Permits

With few exceptions, most individuals providing services in Canada's labour market require a work permit, regardless of duration of stay or source of income. Admission to Canada is generally granted for a specific purpose and is subject to a limited duration. All foreign nationals seeking entry to Canada must ensure that they have the appropriate status for their intended activities and length of stay. The federal government, through Service Canada and Employment and Social Development Canada, is responsible for ensuring that the Canadian labour market is not negatively affected by the use of foreign nationals in place of Canadian citizens or permanent residents. A foreign worker may apply to Immigration, Refugees, Citizenship Canada (IRCC) for a work permit only after Service Canada has provided a Labour Market Impact Assessment (LMIA) to the employer that a job may be offered to a foreign worker. However, in certain circumstances, an employer is exempt from obtaining approval from Service Canada, and the qualifying employee may apply directly for a work permit. Foreign workers employed in lower-skilled and lower-wage occupations have greater restrictions on their ability to work in Canada.

9.5 Drivers Permits

Foreign nationals may drive temporarily in Canada using driver's licenses from their home countries. Because each Canadian province issues driver's licenses independently, rules for foreigners vary. In general, foreign nationals have 60 days from the time of their arrival in Canada to obtain a Canadian driver's license. Depending on the province, an eye examination and a driving examination may be required.

Source: Canadian Justice and Home Affairs Department, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings

Rating (Outlook)Rating Date
Aaa (Stable)
Standard & Poor'sAAA (Stable)
Fitch Ratings
AAA (Stable)20/06/2018

Source: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators

World Ranking
Ease of Doing Business Index
Ease of Paying Taxes Index
Logistics Performance Index
Corruption Perception Index
IMD World Competitiveness10/61

Source: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices

World ranking
Economic Risk Index Rank27/202
Short-Term Economic Risk Score
Long-Term Economic Risk Score72.572.573.0
Political Risk Index Rank4/202
Short-Term Political Risk Score
Long-Term Political Risk Score94.392.392.3
Operational Risk Index Rank9/202
Operational Risk Score74.777.977.5

Source: Fitch Solutions
Date last reviewed: August 29, 2018

10.4 Fitch Solutions Risk Summary

Canada's economy remains vulnerable to a hard landing in the housing market, given record-high household debt levels relative to disposable income. Moreover, the drop in commodity prices in recent years, most notably with oil prices collapsing since June 2014, has exposed the economy's high reliance on energy exports and this has come at a time when the country is facing the adverse effects on job formation and fixed investment in the economy. Furthermore, difficult trade negotiations with the US over NAFTA could result in significantly altered trade terms and, in the worst case, see the agreement collapse.

Canada has several structural strengths that will work in its favour over the coming decade, including a strong fiscal situation, a well-educated workforce, and a good business environment. However, growth will be constrained by other structural factors, including deteriorating demographics, the end of the global commodity boom, and household deleveraging.

Source: Fitch Solutions
Date last reviewed: September 3, 2018

10.5 Fitch Solutions Political & Economic Risk Indices

Graph: Canada short term political risk index
Graph: Canada short term political risk index
Graph: Canada long term political risk index
Graph: Canada long term political risk index
Graph: Canada short term economic risk index
Graph: Canada short term economic risk index
Graph: Canada long term economic risk index
Graph: Canada long term economic risk index

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Economic and Political Risk Indices
Date last reviewed: August 21, 2018

10.6 Fitch Solutions Operational Risk Index

Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Canada Score77.575.271.880.782.1
Developed States Average72.963.370.975.881.8
Developed States Position (out of 27)74141017
Developed States Average72.963.370.975.881.8
Developed States Position (out of 27)7
Global Average49.749.850.049.349.9
Global Position (out of 201)9

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Canada vs global and regional averages
Graph: Canada vs global and regional averages
Operational Risk IndexLabour Market Risk Index
Trade and Investment Risk IndexLogistics Risk IndexCrime and Secruity Risk Index
New Zealand78.0
Isle of Man65.0
Developed Markets Averages72.9
Global Markets Averages49.7

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: August 21, 2018

11. Hong Kong Connection

11.1 Hong Kong’s Trade with Canada

Graph: Major export commodities to Canada (2017)
Graph: Major export commodities to Canada (2017)
Graph: Major import commodities from Canada (2017)
Graph: Major import commodities from Canada (2017)
Graph: Merchandise exports to Canada
Graph: Merchandise exports to Canada
Graph: Merchandise imports from Canada
Graph: Merchandise imports from Canada

Exchange Rate HK$/US$, average
7.76 (2012)
7.76 (2013)
7.75 (2014)
7.75 (2015)
7.76 (2016)
Source: Hong Kong Census and Statistics Department, Fitch Solutions

Growth rate (%)
Number of Canadian residents visiting Hong Kong370,335
Number of Canadians residing in Hong Kong14,8890.02

Visitor Source: Hong Kong Tourism Board
Resident Source: United Nations Department of Economic and Social Affairs - Population Division

Growth rate (%)
Number of North American residents visiting Hong Kong1,585,964
Number of developed state citizens residing in Hong Kong65,6801.5

Visitor Source: Hong Kong Tourism Board
Resident Source: United Nations Department of Economic and Social Affairs - Population Division
Date last reviewed: August 21, 2018

11.2 Commercial Presence in Hong Kong

Growth rate (%)
Number of Canadian companies in Hong Kong106
- Regional headquarters19
- Regional offices30-6.25
- Local offices57-6.56

Source: Hong Kong Census and Statistics Department

11.3 Treaties and Agreements between Hong Kong and Canada

Canada signed on November 11, 2012 an agreement with Hong Kong for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. Under the agreement, tax paid in Hong Kong will be allowed as a credit against tax payable in Canada, while double taxation will be avoided in that any Canada tax paid by Hong Kong companies will be allowed as a credit against the tax payable in Hong Kong in respect of the income. Meanwhile, the withholding tax on interests and royalties received from Canada will be reduced from 25% to 10%, while the withholding tax on Canada dividends will be reduced from the current rate of 25% to 15% (and will be further lowered to 5% upon fulfilling certain conditions). The agreement entered into force on October 29, 2013, and has been effective from the year of assessment 2014/2015.

Source: Fitch Solutions

11.4 Chamber of Commerce (or Related Organisations) in Hong Kong

The Canadian Chamber of Commerce in Hong Kong

Representing some 1,100 members with business interests in Canada, the Chinese mainland and Hong Kong, the Canadian Chamber of Commerce in Hong Kong is the largest Canadian business organisation outside Canada. It is also one of the largest and most active international chambers in Hong Kong and one of the most influential business groups in the Asia Pacific. On the other hand, the Canada-based Hong Kong-Canada Business Association (HKCBA), with over 1,000 members in eight major cities (Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Ottawa, Montreal and Atlantic) coast to coast, is one of Canada's largest bilateral trade associations.

Address: Unit B & C, 10/F, China Overseas Building, 139 Hennessy Road, Wan Chai, Hong Kong
Tel: (852) 2110 8700
Website: https://www.cancham.org/

Source: Directory of Hong Kong Trade and Industrial Organisations, Hong Kong Trade and Industry Department

Consulate General of Canada in Hong Kong
The Consular Section: 9th floor, Berkshire House, 25 Westlands Road, Quarry Bay, Hong Kong
The Office of the Consul General: 5th floor, Tower 3, Exchange Square, 8 Connaught Place, Central, Hong Kong
Email: hkong@international.gc.ca
Tel: (852) 3719 4700

Source: Consulate General of Canada in Hong Kong and Macau

11.5 Visa Requirements for Hong Kong Residents

As of March 15, 2016, citizens of countries that do not need a visa to travel to Canada, including the Hong Kong Special Administrative Region, will be expected to have an eTA to fly to or transit through Canada. It is a requirement to be a full Hong Kong citizen before applying for a Canada eTA, so travelers holding a passport or travel document with a different status, such as refugee, will be required to apply for a full Canada visitor visa, and not an eTA.

Source: Visa on Demand

Content provided by Picture: Fitch Solutions – BMI Research
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