Foreign Direct Investment in Canada

Overview by

FDI in Figures

Since the economic recovery, foreign direct investment (FDI) in Canada, which during the previous decade had grown by 9% per year on average, has been slow and more concentrated. This trend should continue in 2011.

Canada’s main attractions are its highly-skilled population, its abundant natural resources, its commercial dynamism and fiscal incentives, its competitiveness in key sectors (communications, transit, financial services), as well as its geographic proximity to the world’s number one economy, the United States.


Country Comparison For the Protection of Investors

  Canada OECD United States Germany
Index of Transaction Transparency* 8.0 6.0 7.0 5.0
Index of Manager’s Responsibility** 9.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 8.0 6.8 9.0 5.0
Index of Investor Protection**** 8.3 6.0 8.3 5.0

Source: Doing Business

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment 2007 2008 2009
FDI Inward Flow (million USD) 108,414 55,270 18,657
FDI Stock (million USD) 516,283 441,638 524,938
Performance Index*, Ranking on 141 Economies 40 73 100
Potential Index**, Ranking on 141 Economies 12 11 -
Number of Greenfield Investments*** 168 215 254
FDI Inwards (in % of GFCF****) 33.5 16.2 21.7
FDI Stock (in % of GDP) 36.3 29.5 39.3

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Canada

Strong Points
Canada's main advantages are a qualified workforce and an easy access to raw materials. It is one of the most dynamic economies in the world, with a market of 30 million consumers and sophisticated infrastructures, as well as a very modern transportation network.
Weak Points
Canada's weak points are its excessive dependance to the United States and a currently damaged financial system.
Government Measures to Motivate or Restrict FDI
Canada applies a high taxation rate on companies. It is currently the country that applies the lowest payroll taxes in the G7 countries.
Companies establishing their headquarters in Canada should get tax benefits (higher than those offered in the United States) up to 2010 . In addition, the government announced a euro 24.6 billion two-year recovery plan.
Bilateral Investment Conventions Signed By Canada
On 1 June 2007, Canada had signed bilateral agreements with more than 25 countries. See the list of the countries.
To see the conventions, click here.
Canada is a signatory to agreements and arrangements with more than 70 bilateral partners in the aviation sector.


It has concluded FTAs with the United States and Mexico (NAFTA), as well as with Chile, Israel, Costa Rica in July 2007 and Panama in August 2009 (elimination of tariffs in sectors of industry, agriculture, forestry and fishing).

Canada, Peru and the countries of the European Free Trade Association (EFTA: Iceland, Liechtenstein, Norway and Switzerland) signed a free trade agreement on 26 January 2008 at Davos, in Switzerland.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Yes, on condition that the company follows the directives required by the Canadian government.


Foreign investment is subject to the Investment Canada Act.

Acquisition of Holdings
Possible on condition of observing the in-depth procedure of examination of the project.
Obligation to Declare
The foreign investment promotion bureau in the country gives information about the necessary authorizations for setting up a company. Canada is in the first rank of OECD countries as regards the low number of procedures (2) and the shortest time limit (3 days) imposed for setting up an industrial or commercial company. A foreign company can set up in Canada by creating a distinct legal entity or a subsidiary under Canadian federal law or a provincial law governing companies. A subsidiary is treated in the same way as a branch office. It must have a commercial permit or be registered with the province where it does business.
Competent Organization For the Declaration
Investment Canada
Citizenship and immigration Canada - Guide 4000
Requests For Specific Authorizations
There are particular restrictions in the communications and transport sectors. All requests must be sent to the Ministry of Foreign Affairs.
For further information, see investment laws in Canada.
Find Investment Service Providers in Canada on

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  • Investment Climate in Canada

    Strong economic fundamentals, proximity to the U.S. market, highly skilled employees, and abundant resources are key attractions for Americans investors in Canada.

    Bedjasses on 8 Jan 2010 related to Foreign Direct Investment in Canada

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