Growing globally by doing cross-border business? Keep taxes in mind.

If you’re a Canadian-based company doing business anywhere in the world, do you know what your potential income tax liabilities are? If you’re doing international business by providing products or services in the U.S., for example, do you know if you may be subject to U.S. federal, state or local taxation?

In general, Canadian-based companies doing business directly in the U.S. must pay U.S. taxes, based on the amount of income earned from their U.S. business. They also will likely be subject to state taxes, which can vary greatly across the U.S.; they often will be liable for local taxes as well.

The Canada–U.S. Tax Treaty makes it possible for Canadian companies doing business in the U.S. to prevent the double taxation that might otherwise arise due to their U.S. tax exposure. Some recent changes to that Tax Treaty, contained in a new Protocol, will help Canadian companies conduct cross-border business; others, however, have the potential to negatively impact this business.

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