Taxes for Canadian Businesses in the USA

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Taxes for Canadian Businesses in the USA

September 10, 2020

Question:

What taxes does a Canadian business pay in the USA?

Answer:

On a top-level, each state in the USA is a separate “State” with its own taxes; and also within the same nation of the “United States”. Thus, some taxation will be consistent from state to state, some will be inconsistent and some will be coordinated between states to ensure that businesses are not put at a disadvantage when engaging in a multistate transaction.

In this series we will discuss:

Sales Tax
Use Tax
Unemployment Insurance (Payroll Tax)
Withholding (Payroll Tax)
Corporate Income Tax
Excise Tax (Income Tax)
Estimated tax (Income Tax)
And other taxes unique to the United States as a whole and the individual States.

Discussion:

When a Canadian business does business with people outside of Canada the tax rules are different. In this series, we take a detailed state by state look at the taxes a Canadian business will experience when doing business in the USA. There are strategies to either opt-in or opt-out of taxation in a non-Canadian location such as the USA. This series looks at the nature of taxes in each state (50+ blog posts over the next months).

Opting in and opting out of taxation in the USA will be examined at the end of this series. This is a discussion to be had after the business person understands what they are looking at in the nature of taxes in the target jurisdiction, which in this case is the USA.

Availability of Treaty Benefits

The Canada-U.S. tax treaty can provide Canadian corporations with some relief from income taxation but is generally not of many benefits when considering Sales and Payroll taxes. We discuss this further at the end of this series.

If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.

Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.