Canada: Foreign investment

FDI in Figures

According to UNCTAD's World Investment Report 2024, Canada attracted USD 50.3 billion in FDI in 2023, a 9% increase year-on-year, with the country being the sixth-largest recipient worldwide. At the end of the same period, the stock of FDI stood at USD 1.66 trillion. Canada is also one of the main investors worldwide, with an outward FDI position of USD 2.74 trillion. In 2023, sustainable projects made up 29% of Canada's inbound FDI, while reinvestments accounted for 44%. Mergers and acquisitions were the second-largest sources, at 35.5%, with other FDI flows making up 20.2%. By industry, manufacturing saw a significant rise in FDI to CAD 18.2 billion, above the 10-year average, and other industries received CAD 16.1 billion. Trade and transportation also saw slight growth, while energy and mining, and management of companies experienced declines. The finance and insurance sector remained stable. The U.S. led as the top investor with CAD 697.3 billion, followed by the United Kingdom (CAD 94.6 billion), Japan (CAD 49.3 billion), Germany (CAD 41.5 billion), and China (CAD 37 billion). According to the latest data from the OECD, FDI inflows to Canada increased in the first half of 2024, reaching USD 28.2 billion, compared to 25.5 billion in the same period one year earlier.

Canada actively promotes FDI, offering a favourable environment with its proximity to the U.S., skilled workforce, strong legal protections, and abundant natural resources. Foreign investments are treated on par with domestic ones once established. Factors that may hinder FDI in Canada include heavy dependence on the U.S. economy, fluctuations in energy prices, loss of competitiveness in manufacturing due to low labour productivity, low R&D expenditure, and high household debt. In 2020, the USMCA (Canada-United States-Mexico Agreement, an updated version of NAFTA) came into force, with a potentially decisive impact on the inflows and outflows of investments in Canada, just as the Comprehensive Economic and Trade Agreement (CETA) signed with the EU and currently applied on a provisional basis, as the ratification by the individual EU Member States is still pending. At the same time, Canada enhanced scrutiny of certain foreign investments under the Investment Canada Act (ICA) in sectors related to public health or involved in the supply of critical goods and services. Under the ICA, foreign investors acquiring control of a Canadian business must either undergo a "net benefit" review by the Minister of Innovation, Science and Industry if a financial threshold is exceeded or provide notification within 30 days of closing. The threshold for review depends on the investor's nationality, transaction structure, and type of business. These thresholds are adjusted annually based on changes in Canada's GDP. Overall, Canada has a favourable business climate and the country ranks 14th among the 133 economies on the Global Innovation Index 2024 and 16th out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Canada

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

Foreign ownership and investment can be subject to scrutiny by the Canadian Government. Foreign investment is subject to the Investment Canada Act. The federal government has a mandate to screen proposed foreign investments to ensure that they are likely to produce a "net benefit to Canada" and may also review transactions on national security grounds.

Acquisition of Holdings

Possible so long as the procedure for an in-depth examination of the project is respected.

Obligation to Declare

Canada is first among OECD countries in terms of the low number of procedures (2) and the shortest time limit (3 days) required 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. Moreover, foreign investors from countries with specific trade agreements with Canada must generally file an application with Innovation, Science and Economic Development Canada.

Competent Organisation For the Declaration

Invest in Canada
Citizenship and immigration Canada - Guide 4000

Requests For Specific Authorisations

Investment in specific sectors is covered by special legislation. The federal government has exclusive jurisdiction over broadcasting (radio, television and their distribution, including some internet activity) and telecommunications. At least 75% of the voting interests of an air service must be owned and controlled by Canadians. The Bank Act requires ministerial approval (Finance Department) for any foreign investment in the financial sector to acquire or hold control of, or a substantial investment in, a Canadian bank. Non-resident ownership of uranium mining properties is restricted to 49% at the stage of first commercial production. Investment in any activity related to Canada's cultural heritage or national identity is administered by the Heritage Department.
For further information, see investment laws in Canada.

Office Real Estate and Land Ownership

Possible Temporary Solutions

Possibiity to rent offices.

The Possibility of Buying Land and Industrial and Commercial Buildings

It is possible to buy freehold or leasehold, to build industrial and commercial premises or to buy through a real estate company. Although, the federal Citizenship Act permits each province to enact laws restricting ownership of real property within the province by non-residents.

Risk of Expropriation

The expropriation of real estate falls under both federal and provincial regulatory regimes. The legislation on expropriation lays down notice periods. Compensation is generally based on the fair market value of the expropriated land and, in some cases, may include reasonable costs and damages for harmful diseases. There are a few cases of legal precedents.

Investment Aid

Forms of Aid

Companies investing in Canada can benefit from a range of incentives and tax credit programmes:

• Scientific Research & Experimental Development
• Accelerated Investment Incentive
• Strategic Innovation Fund
• Global Skills Strategy
• Canada’s Pan-Canadian Artificial Intelligence Strategy
• Innovation Superclusters Initiative

For more information, please visit Invest in Canada, which is Canada’s global investment attraction and promotion agency.
Each Canadian province and territory has agencies dedicated to the promotion of investment which list existing measures.

Privileged Domains

None of the federal incentives are specifically aimed at promoting or discouraging foreign investment in Canada. The incentives are designed to advance broader policy goals, such as boosting research and development or promoting regional economies.

Privileged Geographical Zones

A Foreign Trade Zone (FTZ) refers to a specific location within a country that is officially designated for eligibility for tariff and tax exemptions with respect to the purchase or importation of raw materials, components or finished goods.
There are currently nine Foreign Trade Zone Points in Canada:

• Windsor–Essex   
• Montreal 
• Cape Breton Regional Municipality
• Halifax Gateway
• Niagara
• Winnipeg’s Centreport Canada
• Calgary Region Inland Port
• Regina’s Global Transportation Hub

Free-trade zones

none

Public aid and funding organisations

The Business Development Bank of Canada offers programs of subsidies and start up assistance.

Investment Opportunities

The Key Sectors of the National Economy

Technology, advanced manufacturing, natural resources, entertainment and media, agribusiness, cleantech and life sciences. 

High Potential Sectors

Information and communication technologies (big data, Internet of Things, AI, cyber-security among others), biotechnologies, health (growing importance of the aging population sector), telecommunications, environment (renewable energies and environmental protection technologies), chemical industry and tourism.

Privatization Programmes

The topic of healthcare privatisation in health sector is being studied by the government. The road infrastructure sector is carrying out some PPP works - " Public Private Partnership". A total of 291 PPP projects are currently active in Canada for a total value of over 139.48 billion CAD.

Tenders, Projects and Public Procurement

Merx , Canadian Public Tenders
Tenders Info , Tenders in Canada
PODS Providers , Procurement Opportunities in Canada
DgMarket , Tenders Worldwide
Buy and Sell Canada , Public Works and Government Services Canada

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors

Several sectors are provincial or federal monopolies in Canada. Amon them are health, alcohol imports, energy, road and education systems. 
FDI is limited in some sectors (broadcasting and telecommunications, air transportation services uranium production, banking). 

Finding Assistance For Further Information

Investment Aid Agency

Business Development Bank of Canada
Global Affairs Canada (Government of Canada)
Invest in Canada (Canada’s global investment attraction and promotion agency)
International trade and investment (Government of Canada)

Other Useful Resources

Invest Canada - Community Initiatives
Investment Quebec
Manitoba Trade and Investment
Invest in Alberta
Invest in British Columbia
Invest in New Brunswick
Invest in Newfoundland and Labrador

Doing Business Guides

Guide to Doing Business in Canada (Gowling WLG)
Doing Business in Canada (Fasken)
Doing business in Canada (Thomson Reuters Practical Law)

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