Canada - Extra Provincial Corporation/Other jurisdictions

Canada is a country with a comparatively strict system of taxation. Ordinary Canadian companies are liable to tax on all their income, wherever it may be derived. For this reason, they have no features attributable to tax-exempt or offshore structures.

Taking these facts into account, Canada has an image in the eyes of entrepreneurs and official institutions as a country with a standard system of taxation. Based on this, any structure established on Canadian territory is a highly prestigious vehicle and in no way carries the “stamp” of a tax-exempt entity.

Canadian legislation in fact offers the opportunity of establishing a tax-exempt entity in Canada. The local legislation of some provinces allows for the domestication of companies resident in other countries, including tax-exempt countries, i.e. for the establishing of their residence in Canada. Structures of this type that have acquired Canadian residence have been named “Extra-Provincial Corporation”, or its abbreviation, EPC.

If an EPC has no source of income in Canada, and if the control and management of the EPC is located outside Canada, the EPC operates in a tax-exempt regime. Accordingly, the incorporation of an EPC in Canada in fact consists of the incorporation of two structures: a principal company (usually from a classic tax-exempt jurisdiction) and simultaneously an EPC in Canada.