Canada Better Than U.S. For Corporate Taxes: KPMG

(CBC News)

Canada has a more competitive tax system for companies than the United States, according to a KPMG study released Monday.

KPMG says Canada, often thought of as a high-tax country, scored third-best out of 10 countries according to the consultancy’s total tax index.

The Canadian score placed this country ahead of seven other major industrialized economies, including the U.S., the United Kingdom and Japan. Only Mexico and the Netherlands posted a better, or lower score, than Canada.

“A lot of governments have been trying to make Canada more competitive for business. And that quest is continuing,” says Greg Wiebe, KPMG’s Canadian managing partner for tax.

“The average person on the street has a view of Canada (as a high tax country) because of their personal tax rates. But, the U.S. has one of the highest corporate income tax rates in the world,” he said.

KPMG’s total tax index attempts to look at taxes at all three levels of government rather than merely adding up the posted corporate tax rates. KPMG examined corporate rates, capital taxes, sales taxes, property taxes among other factors to arrive at its index.

Overall, Canada scored 78.3 in the KPMG study compared to 100 for the United States and 120.8 for Japan.

A lower score indicates a tax system that is more favourable to business while a higher score would mean that country is less business-friendly.

One reason for Canada’s strong showing is the policy whereby some provinces reduce corporate taxes by implementing a variety of tax holidays and tax credits for various firms, according to the study. Read the complete article or view the KPMG competitiveness report here.