TBH, if you are launching a startup, it might not be a terrible idea to incorporate in Canada. Canada has the notion of federal incorporation in addition to each province having its own corporate registry. Federal corporations can exist in any province but all the filings are done in one place.

The new mega-deduction recently announced [1] results in an effective 6% corporate tax rate, which is among the lowest in the world and certainly in the G-7. Things like the RTR are just one example among many of the efficient infrastructure that Canada is introducing to address a very long term productivity gap (the mega-deduction is another).

And, R&D conducted in Canada is always a current-year expense and never capitalized. And there is a refundable tax credit for R&D that works out to about 60% of engineers' salaries (in most provinces). And those salaries are lower than they are in the US (something that engineers in Canada have a right to complain about).

[1] https://www.canada.ca/en/department-finance/news/2026/09/gov...

No the tax rate isn't 6%, this is incorrect. The 6.4% is the marginal effective tax rate on new investment. Rates are unchanged: 26.5% combined federal/Ontario, or 11.2% for CCPC small-business income. And it's still draft legislation released Sept 15

> there is a refundable tax credit for R&D that works out to about 60% of engineers' salaries

I really wish Canada told American companies to fuck all the way off with that. I hate that we support foreign corporate profits with our tax money. It seems like such a scam. I am sure initially it was meant to help innovation and give small businesses an edge, but somehow the googles and the metas can freely take advantage of it too.

>Canada has the notion of federal incorporation in addition to each province having its own corporate registry. Federal corporations can exist in any province but all the filings are done in one place.

I don't personally think federal incorporation is a huge benefit relative to provincial/state-level incorporation. It mainly provides name protection in every province/federally and makes it marginally easier to expand nationally in Canada. It's main disadvantage is a requirement for Canadian-resident directors which can make it a bit difficult to sell the corporation. The tax laws are the same (though for the most part, if you operate outside of Quebec, you're only dealing with one tax agency), and you still have to file extra-provincially in each province you carry on business, which itself comes with provincial filing requirements (i.e. not a one stop shop).

>The new mega-deduction recently announced [1] results in an effective 6% corporate tax rate, which is among the lowest in the world and certainly in the G-7. Things like the RTR are just one example among many of the efficient infrastructure that Canada is introducing to address a very long term productivity gap (the mega-deduction is another).

This is only for new business investment, though granted since you're discussing startups, it's valid to mention that.

>And, R&D conducted in Canada is always a current-year expense and never capitalized. And there is a refundable tax credit for R&D that works out to about 60% of engineers' salaries (in most provinces). And those salaries are lower than they are in the US (something that engineers in Canada have a right to complain about).

This is true. I do wonder how much of an comparative advantage this is now that engineer salaries are no longer capital deductions in the US. I also recall Canada had a startup visa program to bring co-founders to Canada, but that program is paused and I don't know if it really worked.

More than anything, despite all these advantages, I would imagine access to capital is more important to any startup. You can live in the best regulatory environment in the world, and it would mean nothing if you run out of runway. The investment landscape in Canada is hugely conservative overall, and despite being flagged under successive governments that there's a huge death valley between seed to commercialization, no risk has actually been taken to meaningfully address it. [1]

[1]: https://www.bdc.ca/en/about/analysis-research/canada-venture...

If you are a US citizen, the IRS will likely classify your startup as a Controlled Foreign Corporation (CFC), so be prepared to navigate the many tax pitfalls like PFIC, GILTI (now called NCTI).

Getting funding in Canada is significantly more difficult, though. There are fewer investors at every stage of the startup lifecycle here, and those that do exist are more risk-averse. The cheques they write are smaller, too.

My business was in Ontario for its first 7 years, in the US now. I do not miss collecting and reporting HST.

Other than that, Canada is amazing and I miss a lot of aspects.

Regulatory hell!