Taxation of partnerships in Canada
Taxation of partnerships in Canada is a popular issue. This jurisdiction attracts many entrepreneurs because of its low tax rates and relative accessibility of doing business. If you need advice on company registration and payment of fees, please contact our specialists at IT-OFFSHORE.
Payment of fees for limited partnerships
Opening a partnership in Canada is relevant because the LP form is not taxable. There are no requirements for the formation and submission of reporting documents and payment of income tax. Profits earned by the company come to partners who do not have resident status in Canada.
It is not taxable in the country. Therefore, partners that have a residence in Canada will need to pay local taxes. There are no requirements for the submission of audits and reporting on the partnership.
Nuances of taxation for Canadian companies
It is believed that Canada has the lowest tax burden. The tax system is transparent and payments can be optimized. The conditions for business are favorable.
There is a three-level taxation system. Fees may be federal, provincial or local. The burden may vary depending on the type of company, its sphere of activity and turnover, as well as its residence. Residents pay a levy on profits earned from global sources. Non-residents pay a fee on profits received on the territory of the state.
The rate of tariff on profit is 38%. There are several ways to legally reduce the rate to 15%. Provincial profit tax is taken in different provinces at the tariff from 0% to 16%.
The federal VAT rate is 5% and can be summed up with provincial ones from 0% to 10%. The customs duty is paid taking into account the type of imported goods. All firms that have been registered in Canada must submit accounting documents. It is obligatory to keep accounting records.