U.S. companies considering investing or expanding in Canada should do their homework and tap experienced resources to reduce risk and ensure more successful, cross-border operations. Recently, government and industry leaders in the areas of accounting, banking and law, including attorneys from the law firm of Miller, Canfield, Paddock and Stone, P.L.C., gathered to discuss the benefits of U.S.-Canadian arrangements and to note the latest incentives in this area.

• Generous Research & Development (R&D) tax credits – Canada offers the most favorable tax treatment for R&D than any other G7 country. Eligible costs include salaries, overhead, capital equipment and materials.
• Savings on duty – Under NAFTA (North American Free Trade Agreement), goods shipped between the U.S. and Canada can be duty-free as long as they qualify under NAFTA’s rules of origin.

“U.S. and Canadian companies save millions of dollars each year through NAFTA by importing finished goods and materials duty-free,” says Andrew P. Doornaert, attorney at Miller Canfield and a licensed U.S. Customs Broker. “Manufacturing operations such as metal stamping, plastic injection, chemical mixing, and labor intensive assembly work, will usually qualify for NAFTA, but some companies miss this opportunity."

Other significant issues include:

• Government support to business – There are select government programs to help businesses launch in Canada, including financial assistance for new hires and assistance in finding the right location in Canada.
• Accessibility of Ontario – Ontario is within a day’s drive of more than 135 million Canadian and U.S. consumers and makes up 41% of Canada’s economy and 53% of the manufacturing base.
• Favorable exchange rate – All lenders in Canada have groups that specialize in various foreign exchange hedging products, with variations of contracts and swaps and options readily available.
• Good quality of workforce and life – Approximately 70% of Canadian citizens live within 150 miles of the U.S. border. The cost of living in most large Canadian cities is better than or comparable to similar U.S. cities. And, Canadian cities rank better than U.S. cities in terms of the level of crime, pollution, environment and leisure facilities.

“Canada is certainly open for business. As in every new venture, businesses should consider limited liability protection and risk management, funding and financing, public image, income and other taxes and repatriation of capital and profits,” says Jeffrey M. Slopen, attorney in Miller Canfield’s Windsor, Ontario office.

The meeting “Doing Business in Canada” was hosted on May 26, 2004, by the Michigan Association of Certified Public Accountants (MACPA) and included the Canadian Consulate General of Detroit, Collins Barrow Chartered Accountants, Miller Canfield, Standard Federal/ABN AMRO – LaSalle Bank and Ontario Investment Services.

The 330-attorney law firm of Miller, Canfield, Paddock and Stone, P.L.C. was established in Detroit in 1852 and has offices in Ann Arbor, Detroit, Grand Rapids, Howell, Kalamazoo, Lansing, Monroe, and Troy, Michigan. Other offices are located in New York City, Pensacola, Florida, Washington, D.C., Windsor, Ontario, and in Gdynia, Katowice, and Warsaw, Poland. Visit www.millercanfield.com.