While jurisdiction is divided between the federal government, 10 provincial governments and three territorial governments, the rules governing commerce are similar and in many cases identical. For example, corporate and employment laws, with the exception of Quebec’s civil law system, vary provincially, but are largely similar. Canada’s main privacy law is federal, but certain provinces have their own legislation which are generally consistent but may feature additional or differing requirements.
Canadian taxes blend federal and provincial elements, and include a VAT-like tax that has a federal component (GST) and a provincial component (PST). Many provinces have combined the two, meaning consumers pay a harmonized sales tax (HST).
Income tax rates also vary provincially, but the jurisdiction of incorporation is not determinative for tax purposes. Instead, the applicable rate is based on the province or provinces in which the corporation has a “permanent establishment,” defined very generally as a fixed place of business.
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