Ontario,Canada.... a great place to grow your food business
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Brazil and Canada
Canada's first important investment in the
Brazilian economy was the Brazilian Traction Light and Power Company. Later known
as Brascan, this company formed in 1899, and eventually became the largest private
company in Latin America and Brazil's largest private employer, with over 50,000
employees. Brascan currently operates as a subsidiary of the publicly traded company
known as Brookfield Asset Management Inc.
Economic ties have continued on
a considerable scale with Canadian companies having invested billions of dollars
in Brazil.
Brazil has increasingly invested into Canada. In 1989, Gerdau,
now one of the fastest growing steel producers in the world, began North American
expansion with the acquisition of mills in Cambridge, Ontario. This investment
allowed for further North American expansion in 1999, when Gerdau acquired a 75%
interest in AmeriSteel in the United States.
In mid 2001, Brazil Votorantim
Cimentos expanded into North America when it purchased St. Marys Cement, headquartered
in Toronto, Ontario. Following this purchase the company has significantly expanded
throughout North American and currently has offices in over 50 locations across
Canada and the United States.
Eike Batista has demonstrated confidence in
Ontario on more than one occasion. From 1986 to 2001, Batista served as Chairman
and CEO of his Toronto, Ontario headquartered company known as TVX Gold Inc. Announced
in 2002, the company merged with Canadian companies Kinross Gold Corp. and Echo
Bay Mines Ltd. to create the seventh-largest gold producer in the world.
Furthermore,
Ontario serves as a means of raising funds for Brazilian investment, as demonstrated
by Batista. In November of 2007, Mr. Batista's new company, OGX Petroleo e Gas
Participacoes SA, paid $1.2 billion to develop 21 offshore oil areas, making it
the largest winner in Brazil's latest oil auction. The Ontario Teachers Pension
Plan fronted approximately $425 million of the investment, making it second largest
investor in OGX besides Mr. Batista.
Canada/Brazil Tax Treaty
Since
June of 1984, Brazil and Canada have enjoyed a treaty to avoid double taxation.
The treaty allows Brazilian companies to offset Canadian corporate taxes against
income taxes paid in Brazil, and vice-versa. In addition, the treaty also sets
special rates of withholding taxes on interest, royalties and technical assistance
fees. At present, Brazil and the United States do not have a tax treaty.
Withholding Tax Rates (%) for a Brazilian Company in Canada versus the United
States
Ownership
Dividends Interest
Royalties
Canada 10% 15%*
0%**
15%***
United States
-
30% 30%
30%
* The 15% rate applies if the recipient
is a company that is the beneficial owner and holds at least a 10% equity percentage
in the company paying the dividends. Otherwise, domestic withholding tax rates
would apply; the Canadian withholding tax rate is 25%.
**
The 0% rate only applies to arm's length loans. The rate for non-arm's length
loans is 15% under the treaty.
*** A 25% rate
applies to royalties paid in respect of trademarks. The 15% rate applies in all
other cases.
Many companies, including the examples of Gerdau
and Votorantim Cimentos, have established in Ontario to later expand their presence
to the United States. For Brazilian companies, the tax treaty with Canada may
help make this expansion strategy even more compelling.
Source:
Brazil-Canada Tax Treaty data provided by Cristina Berry, Deloitte, São
Paulo. caberry@deloitte.com
From
Ontario to the world's tables
Ontario feeds millions of people around the
world. With its strategic location in the heart of North America, and moderate,
four-season climate, Ontario is the third-largest food production cluster in North
America and one of the most diverse and competitive anywhere.
From Toronto,
the province's largest city, and Ottawa the nation's capital, to the smallest
rural communities, Ontario is home to thousands of food processing companies,
as well as ingredient manufacturers, specialty importers and other value-added
processors and essential service providers such as analytical laboratories, specialty
packaging, storage and transportation suppliers.
Ontario's capabilities
in food go even deeper, with fully accredited food science, processing and safety
programs at the University of Guelph - the country's oldest and most prestigious
agriculturally focused university - less than an hour's drive from Toronto. Post
secondary vocational food processing training is offered at a number of community
colleges. Yet another excellent source of food processing expertise is the Guelph
Food Technology Centre, which provides creative, confidential technical solutions,
training, consulting and auditing in research and development, product development,
packaging, shelf-life, food safety, quality, and productivity improvement. Ontario
is home to an extraordinary breadth and depth of food industry expertise and experience.
That's why many of today's global food industry giants have invested in
Ontario - some of whom are identified here - as well as the emerging stars of
tomorrow: artisanal dairies, cheese makers, bakers, breweries and wineries that
are winning international acclaim with their innovative offerings.
Recent
food industry investments in Ontario:
In the heart of a vast market
One look at
the map tells the story: Ontario's food producers and food processors are strategically
located in the heart of a vast market of more than 400 million North American
consumers.
Whether your products are destined for markets elsewhere in Canada,
the United States, or Mexico, an Ontario location provides rapid access to prosperous
consumer and industrial markets. From the Greater Toronto Area, Ontario's leading
concentration of population and businesses, the biggest markets in North America,
representing 40% of the continent's population base, are all within a single day's
drive, so your food products reach their markets quickly and in fresh condition.
Central to Ontario's transportation infrastructure is the expansive network
of 400-Series high-speed highways that connect directly with U.S. Interstate highways
and other major Canadian arteries … just one part of Ontario's 72,000-kilometre
(45,000 mile) network of paved roads and highways. To meet your customers' time-critical
delivery needs, wherever they're located, whatever their supply chain challenges,
Ontario's large, safe and environmentally-responsible trucking industry has a
flexible cost-efficient solution that works equally well when you are importing
food ingredients.
NAFTA, the North American Free Trade Agreement, came into
effect in 1994 and has created a transparent, rules-based trade and investment
environment for Canada-based exporters and investors to both the United States
and Mexico.
To ensure your products get where they're headed quickly, Ontario
has convenient land border crossings into the United States. Complementing Ontario's
road system are an equally capable high-volume rail system, with multiple border
crossings into the U.S., as well as inland and international marine shipping capabilities
and airports for access to international air cargo for high-value shipments. With
five international airports, a network of regional airports and extensive choice
in air carriers, you can fly from Ontario's gateways to hundreds of U.S. cities
within a few hours, to make maximum use of your time, and in many instances, return
home the same day.
A robust, dynamic and diverse economy
Ontario
has one of North America's largest and most diverse economies and our GDP, at
more than $555 billion, it's larger than those of Switzerland, Belgium, Greece,
Sweden or Austria. As Canada's economic powerhouse, Ontario generates 39% of total
Canadian GDP.
The Ontario economy is broadly diversified and export-oriented.
Ontario produces more autos than any other jurisdiction on the continent. Aerospace
is a major strength. Eight of the world's largest chemical companies are here.
We are world leaders in mining and North America's third largest biotech centre.
In all, since 2003, companies have invested more than $120 billion to expand in
Ontario, including AB Inbev, Vale, Gerdau and Votorantim.
Toronto is Canada's
largest financial services centre and the country's five largest banks are all
headquartered here. They are stable, well capitalized and independent of government
investment or involvement.
A key government priority for our Province's continued
economic growth is to help develop and maintain a skilled workforce, including
welcoming qualified foreign workers.
Our people are…
Skilled:
Our province has a high-quality, publicly funded network of 20 universities and
24 colleges to educate and train post-secondary students in every field, trade
and the most advanced areas of science, engineering and business.
Well-educated:
A higher percentage of our workforce has post-secondary education than any other
G7 country.
Dependable: In manufacturing, the on-the-job
average is 9.5 years (compared to 5.5 in the U.S.), which translates into lower
transition and training costs.
Diverse: Ontario's employees
speak more than 140 languages, so we can work with your customers and suppliers
in their own language, anywhere in the world.
While Ontario has experienced
significant economic growth, we have been able to maintain exceptional quality
of life and work-life balance that attracts and keeps valuable employees. Even
in Ontario's largest centres, employees have easy access to vast recreational,
cultural and entertainment opportunities, free or at modest cost. Our welcoming,
multi-cultural society enables employees to preserve ties with family and friends,
both locally and globally.
Reduce corporate burden
Ontario is continuously
streamlining its regulatory systems - business start-ups require just two simple
steps here, compared to as many as 20 in other industrialized countries. Employee
health care benefits cost Ontario manufacturers less than half as much as their
U.S. counterparts.
Ontario's competitive corporate tax rates stimulate business
investment in the province. All corporations conducting business through a permanent
establishment in Ontario are subject to federal and Ontario corporate income taxes.
Income from food manufacturing and processing is taxed at a lower rate than general
businesses.
Broad-based tax reductions, implemented in 2007, will give Canada
the lowest statutory tax rate in the Group of Seven (G7) by 2012 and allow Canada
to achieve the goal of having the lowest overall tax rate on new business investment.
Financial support programs
Companies with operations in Canada
are eligible for financial support through government programs that provide financial
assistance for infrastructure, human capital and the development and commercialization
of advanced technologies.
The Business Development Branch of the Ontario
Ministry of Agriculture, Food and Rural Affairs can assist companies interested
in applying for government programs and incentives.
How we can help get
you started in Ontario
Ontario sees the benefits of attracting food processing
companies to the province, and offers programs and initiatives to encourage this
process. The Ontario Ministry of Agriculture, Food and Rural Affairs is the provincial
lead on the development of Ontario's food processing industry.
Staff from
our Business Development Branch focus on international companies interested in
maximizing their success by adding an Ontario location. Branch personnel are highly
specialized food processing industry advisors whose goal is to make the move to
Ontario simple and rewarding.
For more information contact:
Bill
Harvie, Investment Attraction Consultant
Email: bill.harvie@ontario.ca
Telephone: 519-826-4405
Fax: 519-826-4333
www.investinontario.com
Ontario Ministry of Agriculture, Food and Rural Affairs
Business Development
Branch 1 Stone Road West, 3NE
Guelph, ON N1G 4Y2 CANADA
www.ontario.ca/omafra
