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Doing Business in Canada | Guide | Resource

The Canadian Business and Investment Environment

Fasken
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Doing Business in Canada 2019

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The laws and political climate of a country work in tandem to create the environment within which business enterprises operate. Both Canada’s federal and provincial governments have created an atmosphere where international businesses can flourish.

Canada has an open, fair, and efficient system of making and administering its laws. Grounded in parliamentary democracy at both federal and provincial levels, the formation of Canada’s commercial and common law has been greatly influenced by England and the United States.

Canadian common law – both contract and tort – is administered through a civil court system. There are many specific mechanisms that have been put in place to encourage the early and efficient settlement of disputes.

This pressure to reach a timely result is in sharp contrast to the protracted and expensive litigation that is so prevalent in the United States. The Canadian legal system also offers predictable outcomes, providing a reassuring environment for business transactions. These advantages apply equally under the distinct civil law system of Québec and the common law system in the rest of Canada.

Canada has long been a supporter of foreign investment but has also needed strong public management to tie the nation together and shape its infrastructure. As the economy has matured, public intervention has become less necessary. Like all advanced countries, Canada has laws to protect consumers, investors, workers, inventors, and the environment.

Canada’s federal and provincial governments have moved to reduce their size and to use alternative systems – like public-private partnerships – to deliver public services. In addition, both levels of government have found more efficient ways to accomplish regulatory objectives. Many restrictions on foreign investment have been eliminated, and other business regulations have been liberalized through free-trade agreements. The business tax system has also been improved. Key sectors such as transportation, energy, communications, and financial services have been deregulated, and many government-owned corporations have been privatized.

Canada has adapted the vast majority of government activities to respect the concerns of business and respond to market forces. The result is a business and investment environment that many foreign companies consider among the most hospitable in the world.

Canada is frequently recognized as having one of the most resilient economies in the world, largely because of its regulatory banking framework. As a result, Canada’s strong banking and financial services sector is a welcome environment for foreign investment, particularly during uncertain economic times. Indeed, as Canada’s economy leads the developed world in weathering the current economic climate, there can be no better place to invest and  conduct business.

The recent announcement by Microsoft to build a new Canadian headquarters in downtown Toronto (to be completed in 2020) underscores the growing importance of Canada as a technology hub. Microsoft will be investing more than $570 million in Canada over the next three years, including expanding its artificial intelligence lab in Montréal. Additional investments will be made in Microsoft’s sales offices in Calgary, Montréal, Ottawa, and Vancouver. One of the main reasons that Microsoft and other tech giants are moving to or growing their presence in Canada is due to the talent throughout the country, which has been highlighted through the development in artificial intelligence expertise and other trends in the innovation field.

Notably, the Canadian technology sector has been on the rise over the past several years. A report from the commercial real estate firm CBRE found that Toronto has created the most tech jobs of any city in the United States and Canada over the past five years. Toronto created 82,100 tech jobs, about 4,200 more than Silicon Valley during the same time period. These investments – and those made by large technology firms and others – help to highlight the growing importance of Canada as an attractive venue for investment and innovation.