InvestIng In Québec - Québec International · (Fujitsu), CGI and Ericsson have set up operations in Québec. In the aerospace industry, ... In Québec, the Act respecting labour

InvestIng In Québec

InvestIng In Québec

ISBN : 978-2-550-59078-1

1. INTRODUCTION5

2. WHY INVEST IN QUÉBEC?6

3. DOING BUSINESS IN QUÉBEC8

4. QUÉBEC TAX PROFILE FOR BUSINESSES11315

5. QUÉBEC TAX INCENTIVES FOR BUSINESSES17

6. INVESTISSEMENT QUÉBEC: YOUR BUSINESS PARTNER23

7. CONTACT INFORMATION25

APPENDIX – OPERATING COSTS29

table of contents

_ NAFTA

_ besT busiNess locATioN

_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes

_ TAx rATes oN busiNess

_ TrANsporTATioN cosTs

_ iNdusTriAl

coNsTrucTioN cosTs

_ creATive TAx iNceNTives

_ creATiviTy

_ r&d

_ brAiN & TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres

_ privATe ANd public

_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies

_ TelecommuNicATioNs

_ lighT meTAls

_ eNergy

_ mATeriAls

_ iNFormATioN TechNologies

_ mulTimediA

_ mAjor liFe

scieNces ceNTre

_ biophArmAceuTicAl

iNdusTry

_ reAl esTATe

_ eNviroNmeNTAl lAw

_ iNTellecTuAl properTy

_ TAx iNceNTives

_ scieNTiFic reseArch

_ experimeNTAl developmeNT

_ TAx beNeFiTs

_ processiNg AcTiviTies

_ AlumiNium vAlley

_ iNTerNATioNAl

FiNANciAl ceNTres

_ culTurAl busiNesses

_ Film or video producTioN

_ smb FiNANciAl

_ FiscAl meAsures

_ sTrATegic supporT

For iNvesTmeNT progrAm

_ regioNAl ecoNomic

iNTerveNTioN FuNd

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes



_ iNdusTriAl

coNsTrucTioN cosTs


_ creATiviTy

_ r&d

_ brAiN & TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


_ lighT meTAls

Investissement Québec, in

part nership with Blake,

Cassels & Graydon LLP

(“Blakes”) and Deloitte, is pleased to provide you with a

comprehensive guide to investing in Québec. Inside, you will

find the essentials that you need to know in order to set up

and grow your business here, as well as take advantage of

attractive tax incentives.

Section 2 begins with a quick overview of why Québec

is drawing investors from all over the world. Section 3 is

an indispensable refere nce tool on legal issues, and

covers civil law, employment and labour law, intellectual

property, environmental law, and immigration and

intra-company transfers.

Sections 4 and 5 detail important information on cor porate

taxes and key provincial and federal tax incentives that could

benefit your business. Section 6 focuses on how Inves tis -

sement Québec can help you every step of the way with its

financing and consulting services. Section 7 provides brief

descriptions of the contributors to the guide, as well as

important contact information.

1 . IntroductIon

InvestIng In Québec 5

At a glance: the top 5 motivatorsQuébec is drawing investors from every continent to grow and develop their business right here. Key benefits to you are:

> A gateway to the U.S. market

> Exceptionally low operating costs

> Attractive financial and tax incentives

> Top talent

> R&D-friendly environment

2.WHY INVESTIN QUÉBEC?

A gateway to the U.S. marketQuébec’s strategic proximity to the U.S. market is one of themain reasons that you’ll want to do business here. You’llfind us in northeastern North America, within a 600-mileradius of vibrant cities such as Boston, Philadelphia, Pittsburgh,New York, Washington and Detroit. This gives you immediateaccess to 130 million consumers, creating one of the mostdesirable business climates in the world. You can makeinroads into these bustling markets with Québec’s advancedtelecommunications and transportation facilities, whichmove goods and services at today’s rapid speed of business.

Exceptionally low operating costsQuébec has the best business location and operating costsof the major industrialized countries. According to aninternational comparative study published in 2010 by KPMG(www.competitivealternatives.com) for 17 industrial sectors,key location-sensitive cost factors in Québec are, on average,7.4% lower than in the United States.

Here are a few highlights that tell the story:> For R&D industries, the key location-sensitive

cost factors are, on average, 22.4% lower than in the United States.

> For manufacturing industries, these costs are, on average, 4.7% lower than in the United States.

> Unit labour costs are almost 17% less than in the G7 countries.

> Electricity rates are some of the most competitiveof all industrialized countries.

> Industrial construction costs are among the lowest in North America, Europe and Asia.

> Tax rates on business profits are among North America's lowest.

> For more details on these figures, see KPMG’s comparative charts in the Appendix.

Attractive financial and tax incentivesQuébec's financial and tax structure helps you do betterbusiness. Québec's corporate income tax rates are amongthe lowest in Canada and lower than those in most U.S. states.High-tech firms, particularly in fast-moving sectors such asbiotechnology and multimedia, can take advantage of special measures such as tax incentives designed topromote their development.

Corporate R&D expenditures enjoy favourable tax treatment.

> This tax treatment is the most competitive in Canadafor SMEs and among the most advantageous of theG7 countries for large enterprises.

Top talentQuébec is renowned for its talented and stable workforce,which has a high average term of employment. Here youwill find one of the highest densities of high-tech jobs inNorth America, particularly in information technologies and multimedia, where 7,300 firms employ 146,000 peopleand generate over $34 billion in revenues. Key playerssuch as Electronic Arts, Ubisoft, IBM, DMR Consulting(Fujitsu), CGI and Ericsson have set up operations inQuébec. In the aerospace industry, nearly 300 firms such asBombardier, CAE, Pratt & Whitney Canada and BellHelicopter Textron employ over 40,000 people. Québecemploys close to 25,000 people in the biopharmaceuticalindustry, mainly in R&D intensive firms such as MerckFrosst, Bristol-Myers Squibb, Boehringer Ingelheim andAstraZeneca.

Québec also invests close to CDN$2.4 billion* in job-relatedtrai ning each year. Its nine universities grant some 68,000gra duate and post-graduate degrees annually. Moreover,Mon tréal ranks first in Canada with over 200 specialized R&Dcentres. Four of Québec’s universities, McGill Univer si ty,Université Laval, Université de Montréal and the Univer si téde Sherbrooke are among the country’s top ten in medicine.

R&D-friendly environmentQuébec is home to some of the most highly creative,technology-driven businesses in the world. Scores ofcompanies in key areas such as life sciences, aerospace,gaming and IT continue to forge close links with universities,colleges and R&D centres. The province has numerous privateand public research centres in key economic sectors suchas health, information technologies and telecommunications,light metals, energy, materials and bio-foods.

R&D spending: Québecstands outSpending on R&D is growing faster in Québec than in theother provinces of Canada.

> Since 1995, Québec has been the province that, as aproportion of its GDP, has posted the highest level ofR&D spending in Canada.

In 2006, Québec allocated 2.7% of its GDP to R&D.

> This level is higher than the average of OECD, G7 andEuropean Union countries.

> Québec’s objective is to invest 3% of its GDP in R&Dby 2010.

InvestIng In Québec / 2. Why Invest In Québec? 7

* Amounts are in Canadian dollars unless otherwise indicated.

3.DOING BUSINESS IN QUÉBEC

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes



_ iNdusTriAl

coNsTrucTioN cosTs


_ creATiviTy

_ r&d

_ brAiN+TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


_ lighT meTAls

_ eNergy

_ mATeriAls


_ mulTimediA

_ mAjor liFe

scieNces ceNTre

_ biophArmAceuTicAl

iNdusTry

_ reAl esTATe

_ eNviroNmeNTAl lAw


_ TAx iNceNTives



_ TAx beNeFiTs


_ AlumiNium vAlley

_ iNTerNATioNAl

FiNANciAl ceNTres



_ smb FiNANciAl

_ FiscAl meAsures

_ sTrATegic supporT


_ regioNAl ecoNomic

iNTerveNTioN FuNd

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes



_ iNdusTriAl

coNsTrucTioN cosTs


_ creATiviTy

_ r&d

_ brAiN+TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


Constitution and governmentBecause of Canada’s federal structure, the authority tomake laws and regulations is divided between the federaland provincial governments by the Canadian Constitution.Thus, while the federal Parliament has jurisdiction overbanking, competition, trademarks, aeronautics and railways,for example, the provinces may legislate on property andcivil rights, health, education and a host of local matters. Inpoint of fact, there are many areas of shared or overlappingjurisdiction. For example, there is a federal corporationsstatute as well as provincial companies legislation; labourand employment may be federally or provincially regulateddepending on how the business is itself regulated, and bothlevels of government have authority to tax. Securities legis-lation has traditionally been a matter of provincial concern;however, in recent years, to bolster Canada’s capital markets,the various regulators have made significant strides inharmo nizing both the process and the content of securitiesregulation.

In addition, Canadian and Québec constitutional law guaran-tees fundamental rights and freedoms and exerts influenceon ordinary statutory law.

The system of government in Québec, as elsewhere inCanada, is based on the British parliamentary system.Québec has a provincial legislature, known as the NationalAssembly, consisting of elected members. The governmentis formed by the political party whose members hold amajority of the seats in the National Assembly, with thecabinet consisting of elected members of the majorityselected by the premier who is the leader of the majority.Elections must be called every five years.

Civil lawThe Civil Code of Québec is a law of general applicationwhich governs persons, relations between persons andproperty. The Code’s preliminary provision proclaims it to bethe foundation of all other laws of the province.

The Civil Code of Québec specifically stipulates that everyperson must exercise his/her civil rights in good faith andthat no right may be exercised unreasonably.

The Civil Code of Québec sets forth general principles inrelation to contracts, i.e., their formation, interpretation andremedies on breach. The Code also prescribes general ruleson certain specified kinds of contracts (“nominate con-tracts”), for example, contracts of sale, lease, employment,services, insurance and so on. However, the Code does notpurport to limit the kinds of contracts to those enumeratedin it. The parties are free to devise new forms of transac-tions, subject to the general precepts of the code.

In most commercial contexts, the rules of the Civil Code of Québec may be deviated from if the parties so wish; how-ever, in other contexts, for example in connection with con-sumer contracts or contracts of adhesion, the Code willprescribe special rules designed to protect the weaker partyor will set forth a minimum standard. Such fundamentalrules are of “public order”, i.e., they cannot be waived by the parties.

Québec has also adopted the United Nations Convention onContracts for the International Sale of Goods.

The Civil Code of Québec contains a modern codification ofrules of private international law, lending certainty in thecontext of international transactions. For example, the Code recognizes governing law clauses and jurisdictionclauses, subject to certain conditions well recognized underinternational law.

InvestIng In Québec / 3. doIng busIness In Québec 9

Business enterprisesA business enterprise may be carried on in Québec in anynumber of forms: through an unincorporated branch of theforeign entity, an incorporated company, whether incorpo-rated under Canadian, Québec or some other Canadianprovincial law where it may be advantageous, a limited or general partnership, by means of joint venture or othercontractual means such as a distribution or agency agree-ment. The reasons for selecting one form over another willdepend on a number of business considerations, including taxbenefits, protection of investors, residency requirements of directors, flexibility in terminating the venture, and a hostof other reasons dependent upon the circumstances. Wherecarrying on a business in Québec, the relevant entity mustregister by means of filing a declaration with the QuébecEnterprise Registrar. The declaration provides basic infor-mation accessible to the public on the entity’s businessnames, management, owners and places in which it carrieson business in Québec, and must be updated annually. Ofnote, the Québec government has adopted new businesscorporations legislation, which is expected to come intoeffect sometime in 2011. The new legislation significantlyreforms and modernizes existing law, including by permit-ting a wholly-owned subsidiary to be constituted without theneed for a board of directors, which can ease the burden fora foreign investor intending to carry on business in Québec.

Employment and labour lawIn Québec, the Act respecting labour standards prescribesthe minimum conditions of employment on such mattersas wages, hours of work, holidays and vacation periods,maternity, paternity, adoption and parental leave, noticeof termination of employment and, with other legisla-tion, equal pay for equal work. The Civil Code of Québecalso provides for requirements with regard to employ-ment contracts, including notice of termination of employment.

The Québec Labour Code regulates collective bargaining inthe private sector in the province of Québec. The legislationentrenches the right of employees to organize, if so desired,and to be represented by the bargaining agent of theirchoice, without interference from employers. The collective bargaining process is regulated in order to facilitate theconclusion of a collective agreement between the parties.

Québec law prohibits discrimination in matters of employ-ment. For example, it prevents any person from discrimi-nating in respect of the hiring, apprenticeship, duration ofthe probationary period, promotion, transfer, laying-off,suspension, dismissal or conditions of employment of aperson. Grounds upon which discrimination is prohibitedinclude age (with exceptions), race, sex, sexual orientation,disability, language and national origin.

10 InvestIng In Québec / 3. doIng busIness In Québec

GENERAL INFORMATION ABOUT

EMPLOYMENT STANDARDS IN QUÉBEC

> Minimum wage: CDN$9.50 / hour

> Regular work week: 40 hours

Overtime rate: Time and a half after 40-hour regular work week

> Legal holidays: Eight days per year

> Paid vacation: For employees with one year of seniority – 2 weeks

For employees with five years of seniority – 3 weeks

Québec law prohibits

discrimination in matters

of employment.

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Immigration and intra-company transfereesThe Québec Immigration Act generally prohibits any person,other than a Québec resident, from engaging in employmentin Québec without first obtaining a certificate of acceptancefor temporary work. The foreign worker will also need toobtain a work permit from the federal authorities.

Certain persons may be granted a work permit for Québecwithout first obtaining confirmation of the job offer fromCanadian or Québec immigration authorities, including“intra-company transferees”. Intra-company transferees aregenerally defined as executives, managers and specializedknowledge workers. This group includes “persons in seniorexecutive and managerial categories carrying a letter froma company carrying on a business in Canada, which iden-tifies the holder as an employee of a branch, subsidiary,affiliate or parent of that company located outside ofCanada and who seeks to enter Canada to work at a seniorexecutive or managerial level for a temporary period at apermanent and continuing establishment of that companyin Canada.”

A specialized knowledge worker must demonstrate specia -lized knowledge of a company’s service or product and itsapplication in international markets or an advanced level ofknowledge or expertise in the organization’s processes andprocedures. Applicants in the intra-company transfereecategory, being executives, managers and specializedknowledge workers, must have worked for at least oneyear of the previous three years in a similar position for thecompany that plans to transfer them to Canada.

The spouse and dependent children of a work permit holderare entitled to accompany the foreign worker to Québec, butare not permitted to work in Québec without first obtaining awork permit in their own name. Dependants of a work permitholder are permitted to attend school in Québec, but arerequired to first obtain a study permit from ImmigrationCanada.

LanguageThe Charter of the French Language makes French the offi -cial language of Québec and confers on every person theright to be communicated with in French, includingbusinesses which carry on a business in Québec. Thus,business names used in Québec must be French, subject toimportant exceptions where trademarks are involved. Lawsand regulations are drafted in French and English and legal proceedings may be undertaken in French or English.The Charter also deals with the use of French in publicareas, social and public services, professional corporationsas well as labour relations. Although Québec government bodies will use French in dealing with Québec residents andbusinesses, and local contracts will often be drafted inFrench, dealings with foreign investors and companies cantake place in another language, particularly English as theprevalent language of international business. As well, mostgovernment services may be provided in English to English-speaking residents upon request.

The language of private contracts is a matter of negotiationbetween the parties, and in an international context, it is commonplace to write in an express “English languageclause” (in both French and English) confirming the parties’selection of English as the language of the contract andassociated documents.

For companies operating in Québec, given that the majorityof the population is French-speaking, the law requires that such companies have products and services availablein French and use French in commercial documentation(for example, directions for use, warranty certificates, catalogues, brochures, advertising, order forms, invoices,receipts, etc.), subject to permitting use of another languagepursuant to regulated exceptions. This requirement alsoapplies to web sites.


In Québec, French is the language of instruction in publickindergarten, elementary and secondary schools, subjectto certain exceptions for children of English-speaking resi-dents who have access to the English public school system.However, all parents, including immigrants, have the optionof sending their children to private schools where the lan-guage of instruction can be English.

Real estateThere are no Québec-specific prohibitions on the purchase ofreal estate by non-residents in the province, although trans -actions above a certain threshold or within a prescribedbusiness activity may entail notice to or review by the federalCanadian authorities that oversee foreign investment andanti-trust matters (see “General Rules on Foreign Investmentsand Merger Regulation” below). In addition, there may be acorporate registration requirement related to the purchaseof real estate. General restrictions are applicable to resi-dents and non-residents alike with respect to the purchaseof agricultural land and designated cultural properties.

Most real estate transactions involve a review of title, theobtaining of an up-to-date survey and, more recently, theobtaining of title insurance in certain circumstances.Conveyance deeds may be either under private signature orexecuted before a Québec notary. The Civil Code of Québecalso contains all legislative provisions governing the land-lord tenant relationship.

Québec also imposes a graduated land transfer tax duty,subject to a variety of exemptions, including in respect ofrelated companies.

Environmental lawThe main environmental statute in Québec is theEnvironment Quality Act (EQA). The EQA makes it an offenceto deposit or allow the deposit of a contaminant into theenvironment over and above limits set by decree or by regulation or in a manner that negatively impacts on the

environment or human health. Accidental releases must bereported to the Ministry of Sustainable Development,Environment and Parks immediately.

The EQA confers upon all persons the right to the protec-tion of the environment to the extent set forth in the EQA. Aperson residing in the immediate vicinity of a place where aviolation may occur, the Attorney General, and the localmunicipality may apply to the Québec Superior Court for aninjunction to prevent or stop a violation from occurring orcontinuing.

Intellectual propertyAlmost all business transactions and new product launcheshave intellectual property implications. Many products havevarious aspects that require protection.

For example, a “patent” protects new, useful and inventivefunctional features of a product or process. “Copyright”protects, among other things, original drawings by which aproduct is designed and software. An “industrial design”registration protects a novel and original aesthetic design.“Trademark” protection is available for a distinctive word ordesign identifying the source of a product.

Any secret formula or manufacturing process for a productor business method that is known exclusively by the busi-ness would constitute proprietary "confidential information"."Personality rights" may be involved if the name or likenessof a person is used to promote a product. "Topographyrights" and "plant breeders' rights" protect the productsof certain industries.

With only a few exceptions, federal law governs intellectualproperty in Canada. Federal statute law regulates patents,trademarks, copyright and moral rights, industrial designs,topography rights and plant breeders’ rights.


The only provincially regulated aspects of intellectual propertyare through the civil law action of unfair competition (similarto the common law action of passing off), personality rightsenshrined in the Civil Code of Québec and confidentialinformation. Québec law also governs trade names andcontracts related to intellectual property, such as transfers,licenses and hypothecs (i.e., security interests).

General rules on foreign investmentsand merger regulationThe Investment Canada Act is a federal Canadian statuteof broad application regulating investments in Canadianbusinesses by non-Canadians. Except with respect tocertain sectors, the Investment Review Division ofIndustry Canada (“Investment Canada”) administers theAct under the direction of the Minister of Industry.Investments by non-Canadians to acquire control overexisting Canadian businesses or to establish new onesare either reviewable or notifiable under the Act. The rulesrelating to acquisition of control and whether an investoris a “Canadian” are complex and comprehensive.

A “direct acquisition” for the purpose of the InvestmentCanada Act is the acquisition of a Canadian business byvirtue of the acquisition of all or substantially all of itsassets or a majority (or, in some cases, one-third or more)of the shares of the entity carrying on the business inCanada. Subject to the exception for WTO investorsdescribed below, a direct acquisition is reviewable wherethe value of the acquired assets is CDN$5 million or more.

An “indirect acquisition” for the purpose of the InvestmentCanada Act is the acquisition of control of a Canadian busi-ness by virtue of the acquisition of a non-Canadian parententity. An indirect acquisition is reviewable where (a) thevalue of the Canadian assets is less than or equal to 50% ofthe value of all of the assets acquired in the transaction andthe value of the Canadian assets is CDN$50 million or more,

or (b) the value of the Canadian assets is greater than 50%of the value of all of the assets acquired in the transactionand the value of the Canadian assets is CDN$5 million or more.

The acquisition of control of an existing Canadian businessor the establishment of a new one may also be reviewable,regardless of asset values, if it falls within a prescribedbusiness activity related to Canada’s cultural heritage ornational identity.

The Investment Canada Act reflects commitments made byCanada as a member of the World Trade Organization orWTO. In the case of a direct acquisition by or from a “WTOinvestor” (that is, an investor controlled by persons who are residents of WTO member countries), the threshold issignificantly larger, and is adjusted for inflation each year.The 2010 threshold is CDN$299 million (this thresholdincreases annually). Other than the exception noted below,an indirect acquisition involving a WTO investor is notreviewable by Investment Canada (however, a simple notifi-cation must be filed).

In light of recent amendments to the Investment Canada Act,a new threshold based on the “enterprise value” of theacquired business will apply. The criteria for determining“enterprise value” will be set out in regulations that have yet to be issued. Investment Canada officials haveadvised that, until such time as the regulations defining“enterprise value” are issued, the threshold for evaluatingthe reviewability of proposed transactions will continue tobe CDN$5 million/CDN$299 million in the aggregate valueof the assets being acquired.

Mergers that satisfy certain prescribed thresholds must bereported to the Competition Bureau pursuant to Canada’sCompetition Act, and certain statutory waiting periods musthave elapsed (subject to certain exceptions), before a mergercan be completed.


The thresholds applicable to a merger transaction are as follows:> Size of parties test: the parties to the transaction,

together with their affiliates, must have assets inCanada, or gross revenues from sales in, from or intoCanada, that exceed CDN$400 million.

> Size of transaction test: in respect of the target, the value of the assets in Canada, or gross revenuesfrom sales in or from Canada from such assets, mustexceed CDN$70 million. In the case of the acquisitionof a corporation or an unincorporated entity, as wellas in the case of the formation of an unincorporatedentity (e.g., joint venture), the assets and gross revenues are those of the corporation or entity and its affiliates being acquired.

> Shareholding/interest test: in addition to the abovetwo threshold tests, the Competition Act prescribes a shareholding/economic interest test that applies to the acquisition of an interest in a corporation or in an unincorporated entity. Regarding a corporation, in addition to the financial thresholds, there is an additional requirement that the acquirer and its affiliates must be acquiring more than 20% or 35% of the voting shares of a public or private corporation, respectively, or where the acquireralready owns such number of voting shares, wherethe acquirer acquires more than 50% of the votingshares of the corporation. In the case of the

acquisition of an interest in an unincorporated entity,the test is similar to the above, except that the inter-est is based on the right to more than 35% of theprofits or assets on dissolution, and if this level hasalready been exceeded, then more than 50%.

If all applicable thresholds are exceeded, the parties to the transaction are required to provide theCommissioner of Competition with prescribed infor-mation relating to the parties and their affiliates.

For permission to reprint section 3 “Doing Business in Québec”, please contact Émilie Arsenault, Co-ordinator, Client Relations & Marketing, at 514 982-4095 or [email protected].

For further information on doing business in Québec, the reader is invited toread “Blakes Guide to Doing Business in Québec”: www.blakes.com/english/legal_updates/reference_guides/DoingBusinessinQuebec.pdf

The foregoing is intended for information purposes only and does not create a lawyer-client relationship. The transmission of this information does not suggest Blakes or any of its lawyers is practising law in any jurisdiction otherthan those in which its offices are physically situated. The information providedin this section is summary in nature and does not constitute legal advice. We would be pleased to provide additional details or advice about specific situations if desired.

The information contained in section 3 “Doing Business in Québec” (A Blakes Legal Primer) is current as of April 2010.


4.QUÉBEC TAXPROFILE FORBUSINESSES

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes



_ iNdusTriAl

coNsTrucTioN cosTs


_ creATiviTy

_ r&d

_ brAiN+TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


_ lighT meTAls

_ eNergy

_ mATeriAls


_ mulTimediA

_ mAjor liFe

scieNces ceNTre

_ biophArmAceuTicAl

iNdusTry

_ reAl esTATe

_ eNviroNmeNTAl lAw


_ TAx iNceNTives



_ TAx beNeFiTs


_ AlumiNium vAlley

_ iNTerNATioNAl

FiNANciAl ceNTres



_ smb FiNANciAl

_ FiscAl meAsures

_ sTrATegic supporT


_ regioNAl ecoNomic

iNTerveNTioN FuNd

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes



_ iNdusTriAl

coNsTrucTioN cosTs


_ creATiviTy

_ r&d

_ brAiN+TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


_ lighT meTAls

This section provides a brief overview of the Québec corpo-rate taxes.

Income tax ratesCorporate income tax is levied in the province of Québec byboth the federal and the provincial governments. The generalcorporate tax rate at the federal level is currently 18%. Thisrate is reduced to 11% on the first CDN$500,0001 of activebusiness income earned by a small Canadian-controlledprivate corporation (“CCPC”). A CCPC generally means a private corporation, of which the shares held by non-residentsdo not exceed 50%. Investment income earned by a CCPCis taxed at the rate of 34.67%.

The Québec general corporate tax rate is currently 11.9% on both active business income and investment income.The corporate income tax rate on active business income ofa small CCPC is 8% and generally applies to the firstCDN$500,0002 of active business income.

Capital taxesThe Québec government levies a corporate capital tax basedon a corporation’s taxable capital. Generally, paid-up capital,retained earnings, other surplus and most debt are includedin a corporation’s taxable capital. Certain deductions are permitted in computing taxable capital, including adeduction for investments in other corporations. In addition,a portion of the taxable capital of small and medium-sizedenterprises (“SMEs”) may be exempted.

The Québec capital tax rate is currently 0.12%. The 2008-2009 Québec Budget eliminated the capital tax for manu-facturing corporations. A deduction is allowed to such corporations in calculating their paid-up capital, toenable them to completely eliminate their tax on capital.

The elimination of the capital tax is complete for a manu-facturing corporation whose proportion of activities attrib-utable to manufacturing and processing, for a given taxationyear, is 50% or more; if such proportion is between 50% and20%, the deduction a manufacturing corporation mayclaim in calculating its paid-up capital is reduced.

The Québec capital tax will be eliminated for all corpo -rations as of 2011.

It should be noted that the federal corporate capital taxhas been eliminated since 2006.

Payroll taxesQuébec employers are generally required to make contri-butions on behalf of their employees to the Québec PensionPlan (the rate for an employer is currently 4.95% on maximumcontributory earnings of CDN$43,700 per employee) and tothe federal Employment Insurance regime (the contributionrate for an employer is currently 1.90% on maximum insur-able earnings of CDN$43,200 per employee). Since January 1, 2006, employers have been required to makecontributions, on behalf of their employees, to theQuébec Parental Insurance Plan (the rate for an employeris currently 0.708% on maximum contributory earnings ofCDN$62,500).

The Province of Québec also requires employers to pay acontribution to the Health Services Fund (“HSF”) at a rateup to 4.26% of wages (the rate of 4.26% is applicable forpayrolls over CDN$5 million). Other payroll taxes are alsolevied by the Québec government such as the contribution tothe Québec Workmen’s Compen sation Board (average rateof 2.19% of payroll on maximum earnings of CDN$62,500per employee) and the contribution to the Québec LabourStandards Board (0.08% of payroll on maximum earnings ofCDN$62,500 per em plo yee). Employers also have to spend1% of their payroll on employee training.

Indirect taxesThe Goods and Services Tax (“GST”) and the Québec SalesTax (“QST”) are indirect taxes which currently apply to mostgoods and services at the rate of 5% in the case of GST and7.5% in the case of QST. Unlike income tax, the GST/QST aretaxes on consumption rather than profits.

Generally speaking, each registered supplier of taxablegoods and services collects the applicable tax from its purchasers at the time of sale. Suppliers deduct from theircollections any GST/QST they have paid on their own purchases (called “input tax credits”/“input tax refunds”)and remit the difference to the appropriate tax authority.

As mentioned, GST is currently imposed at the rate of 5%while the QST is imposed, until the end of 2010, at the rateof 7.5%3 (QST taxable amount includes the applicable GST).

The information contained in section 4 “Québec Tax Profile for Businesses” is current as of April 7, 2010.

16 InvestIng In Québec / 4. Québec tax ProfIle for busInesses

1. As of January 1, 2009. Prior to that date, the active business income limit was $400,000.

2. As of March 20, 2009. Prior to that date, the active business income limit was $400,000.

3. The 2009-2010 Québec Budget announced that, as of January 1, 2011, the rate of the QST will rise from 7.5% to 8.5%. In addition, the 2010-2011 Québec Budget announced another increase in the QST rate, which will be 9.5% as of January 1, 2012.

5.QUÉBEC TAXINCENTIVES FORBUSINESSES

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes



_ iNdusTriAl coNsTrucTioN cosTs


_ creATiviTy

_ r&d

_ brAiN+TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


_ lighT meTAls

_ eNergy

_ mATeriAls


_ mulTimediA

_ mAjor liFe scieNces ceNTre

_ biophArmAceuTicAl

iNdusTry

_ reAl esTATe

_ eNviroNmeNTAl lAw


_ TAx iNceNTives



_ TAx beNeFiTs


_ AlumiNium vAlley

_ iNTerNATioNAl

FiNANciAl

ceNTres



_ smb FiNANciAl

_ FiscAl meAsures

_ sTrATegic supporT

For iNvesTmeNT

progrAm

_ regioNAl ecoNomic

iNTerveNTioN FuNd

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes





_ creATiviTy

_ r&d

The federal and Québec governments offer a broad range oftax incentives for corporations. The following section pro-vides a brief overview of some of the tax incentives offered.

Tax incentives forinnovative businessesScientific research and experimentaldevelopment (“SR&ED”)A large number of incentives are available to companiesthat carry out SR&ED in Canada and particularly in theprovince of Québec. These incentives are typically in theform of tax credits as a percentage of eligible SR&EDexpenditures. They are granted both by the federal and theQuébec governments.

Eligible activitiesFor income tax purposes, SR&ED activities mean an investigation or search carried out in a field of science ortechno logy by means of experiment or analysis and thatfalls into one of the following categories: basic research,applied research, or experimental development and sup-port work. Typically, industrial companies carry out experi-mental development work to improve their products orprocesses.

A project will qualify for SR&ED tax incentives if the follow-ing three criteria are met: scientific or technologicaladvancement (the project provides information thatadvances the taxpayer’s understanding of scientific ortechno logical relations); scientific or technological uncer-tainty (the possibility of attaining a given objective orresult, and/or how to attain it, are unknown according tocurrent and generally available scientific or technological

knowledge); and scientific and technical content (thereis evidence that a systematic investigation throughexperiment or analysis was carried out by qualified per-sonnel having relevant experience in science, technologyor engineering).

Tax benefits (federal and Québec)SR&ED expenditures generate favourable tax treatmentsince current and capital SR&ED expenditures can bededucted in the year they are incurred or can be carried for-ward indefinitely as is deemed necessary to minimize thetaxpayer’s tax liability.

In addition to the flexibility regarding the timing of theexpenditures’ deduction, taxpayers may also benefit fromtax credits. Typically, tax credits reduce income taxes other-wise payable in Canada (both federally and provincially).However, in Québec, these tax credits are always refund-able even where no corporate taxes are payable. They mayalso be refundable at the federal level where the companyis considered a CCPC with net equity and taxable incomebelow certain thresholds. Unused tax credits or tax creditsnot refunded can be carried back three years or carried for-ward twenty years to reduce taxes payable in those years.

Federally, SR&ED expenditures entitle a corporation to a20% tax credit. If, on the other hand, the corporation is aneli gi ble CCPC, the first CDN$3 million of expendituresgive rise to a 35% cre dit,4 which, as described above, is refund-able. At the federal level, SR&ED expenditures generallyinclude salaries and wages of employees performing theSR&ED5 work, SR&ED contracts, third-party payments (uni-versities, approved organizations, etc.) materials (consumedor trans formed), some overhead (or replacement amount ifelection is made), equipment rentals, and equipment purchases.

At the Québec level, for a corporation carrying on a businessin Canada and performing SR&ED work in Québec, or havingsuch work done in Québec on its behalf, the basic refund-able tax credit is determined at the rate of 17.5% on eligibleexpenditures, which include salaries and wages, and 50% of amounts paid to unrelated Québec subcontractors (100%if related).

For a corporation under Canadian control with assets(including assets of worldwide associated corporations)below a certain threshold for its preceding year, the refund-able tax credit rate will vary between 17.5% and 37.5%6 onthe first CDN$3 million of eligible expenditures. Eligibleexpenditures in excess of CDN$3 million will give rise to arefundable tax credit at the rate of 17.5%.

18 InvestIng In Québec / 5. Québec tax IncentIves for busInesses

4. The maximum limit on which the 35% tax credit can be determined is CDN$3 million. This limit can be reduced, depending on the level of income or taxable capital of the corporationfor its previous taxation year.

5. As of February 26, 2008, and subject to a limit, salaries incurred for SR&ED activities carried on outside Canada are eligible expenditures for the purposes of the federal tax credit.

6. Where assets (including assets of worldwide associated corporations) are less than CDN$50 million, the tax credit rate is 37.5%. A progressive reduction from 37.5% to 17.5%is applicable for corporations with assets between CDN$50 million and CDN$75 million. The tax credit rate is 17.5% for corporations with assets of CDN$75 million or more.

Example:SR&ED project of CDN$1 million (CDN$400,000 in salaries,CDN$100,000 in materials and CDN$500,000 in overhead)

Québec refundable tax credit:(CDN$400,000 X 17.5%) CDN$70,000

Federal tax credit:(CDN$1,000,000 — Québec tax credit) X 20% CDN$186,000

SR&ED project of CDN$1 million (same expenditures asabove) done by an eligible CCPC (total assets not exceed-ing CDN$50 million)

Québec refundable tax credit:(CDN$400,000 X 37.5%) CDN$150,000

Federal refundable tax credit:(CDN$1,000,000 — Québec tax credit) X 35% CDN$297,500

Québec refundable tax credit for SR&ED under a university research contractA corporation carrying on a business in Canada and performingSR&ED work in Québec, or having such work done in Québec on its behalf, and entering into a research contract with an eligible Québec university or an eligible research centre may claim, under certain conditions, a refundabletax credit equal to 35% of 80% of the payment made to theuniversity for SR&ED (effective tax credit rate of 28%).

Example:SR&ED project of CDN$1 million subcontracted to a Québec university

Québec refundable tax credit:(CDN$1,000,000 X 80% X 35%) CDN$280,000

Federal tax credit:(CDN$1,000,000 — Québec tax credit) X 20% CDN$144,000

SR&ED project of CDN$1 million subcontracted by an eligible CCPC to a Québec university

Québec refundable tax credit:(CDN$1,000,000 X 80% X 35%) CDN$280,000

Federal refundable tax credit:(CDN$1,000,000 — Québec tax credit) X 35% CDN$252,000

Refundable tax credit for private partnership pre-competitive researchThis refundable tax credit applies to SR&ED projects thatinvolve a “private-private” partnership. The taxpayer claimingthis refundable tax credit must be carrying on a business inCanada and performing SR&ED work in Québec, or havingsuch work done in Québec on its behalf. The rate of thisrefundable tax credit is 35% and is applicable to all eligibleSR&ED expenditures (and, where the work is subcontractedto an unrelated person, on 80% of the amount paid to thesubcontractor).

In order to get this tax credit, a taxpayer must obtain an eligibility certificate from the Ministère du Développementéconomique, de l’Innovation et de l’Exportation (“MDEIE”).

Refundable tax credit on dues andfees paid to a research consortium A corporation carrying on a business in Canada and whichis a member of a recognized research consortium canobtain a refundable tax credit of 35% on the dues or feesreasonably attributable to SR&ED activities carried on bythe research consortium in Québec.

Tax exemption for foreign expertsand researchersAn individual non-resident of Canada employed as a foreignexpert or researcher by a corporation carrying on a businessin Canada and carrying on SR&ED activities in Québec, maybenefit, under certain conditions, from the Québec incometax exemption for a period of up to five years applicable onthe salaries and wages paid to him/her. This tax exemptionapplies to 100% of the salaries and wages of a foreignexpert or researcher for the first two years. The tax exemptionwill apply to 75% of the salaries and wages paid to him/herfor the third year, 50% for the fourth year and 25% for thefifth year. In order to get this tax exemption, the foreignexpert or researcher must obtain an eligibility certificatefrom the MDEIE.This exemption does not apply to federalincome tax.

Tax holiday for new corporationscommercializing intellectual property (“IP”)The 2009-2010 Québec Budget introduced a 10-year taxholiday for new corporations dedicated to the commercial-ization of IP developed in Québec universities and Québecpublic research centres. To be eligible, a corporation mustbe incorporated after March 19, 2009, and before April 1,2014, and not be the result of a merger of existing compa-nies. In addition, all or almost all of its income must beearned from an “eligible commercialization business.”

An “eligible commercialization business” means a businessfor which the MDEIE issues a certificate stipulating that, inits view, the only purpose of the business is to produce andsell goods with more than 50% of their value stemmingfrom eligible IP, to produce and sell goods of which anessential component is an eligible IP, and to license com-puter programs that are eligible IPs. Eligible IPs will includepatents issued under the Patent Act (Canada) and the copy-right on a computer program that the MDEIE believes constitutes a significant technological advancement.

Refundable tax credit for thedevelopment of e-businessTo consolidate the development of companies in the infor - mation technology sector, a temporary refundable tax creditis offered for e-business development activities. An eligiblecorporation may claim this tax credit until December 31,2015, equal to 30% of the eligible salaries it incurs as ofMarch 14, 2008. The maximum amount of the tax credit thatan eligible corporation may claim regarding an eligibleemployee, for a taxation year, is CDN$20,000.

InvestIng In Québec / 5. Québec tax IncentIves for busInesses 19

In order to be eligible for this new refundable tax credit, acorporation must hold an eligibility certificate delivered byInvestissement Québec.

Refundable tax credits for activitiescarried on in BiotechnologyDevelopment Centres (“BDCs”)A corporation carrying on innovation activities in biotech-nology in a BDC may take advantage of the following tax benefits:

> a refundable tax credit of 30% for wages and salariespaid to eligible employees (maximum of CDN$11,250 per employee);

> a refundable tax credit of 30% on the cost of eligibleproperty (specialized equipment) acquired or leased;

> a refundable tax credit of 30% on the cost of the short-term rental of eligible specialized facilities at each BDC.

The tax credit on salaries and wages is available for a periodof 10 years, up to December 31, 2013. The tax credit onacquisition of eligible property is available for 3 years, whilethe tax credit on leasing of eligible property is available for 5 years. The tax credit for renting eligible specialized facilities is available for 5 years. In addition, a foreignspecialist employed by a corporation carrying on innovativeactivities in a BDC may benefit from a Québec income tax exemption on the related employment income. This taxexemption will vary from 100% to 25% of employmentincome over a period of 5 years. This exemption does notapply to federal income tax.

In order to be eligible for the above-listed tax benefits, thecorporation must hold an eligibility certificate delivered byInvestissement Québec. This certificate will confirm thatinnovative operations in the field of biotechnology are carriedon in one of the four BDCs located in the province of Québec(Laval, Sherbrooke, Saint-Hyacinthe and Lévis).

Refundable tax credit for multimedia titlesA multimedia title means a title produced on electronicmedia, controlled by software that allows interactivity, andincludes a satisfactory quantity of three of the following fourtypes of data: text, sound, fixed images and animatedimages. A refundable tax credit is available for corporationsproducing such titles. This tax credit can be claimed by corporations, whether specialized or not, that producemultimedia titles. The tax credit rate will vary between26.25% and 37.5% on eligible salary expenditures incurredwith respect to eligible multimedia titles produced. Eligiblesalary expenditures also include 50% of amounts paid tounrelated Québec subcontractors.

The 2010-2011 Québec Budget broadened the rules concern-ing eligibility for the refundable tax credit. Consequently, production activities for a digital animation movie, which istaken from a video game developed by the same corporation,will now be eligible for the credit.

An eligibility certificate issued by Investissement Québec isrequired for each multimedia title produced or for the entirebusiness where all or substantially all of the activities of thecorporation consist in producing multimedia titles.

Refundable tax credit for industrial design activitiesThe Québec government offers a refundable tax credit forcorporations carrying on design activities. The basic rateof this tax credit is 15%, but can be raised up to 30% forsmall and medium-sized enterprises (“SMEs”). The 30%tax credit rate is applicable to SMEs with assets ofCDN$50 million or less (including assets of all associatedcorporations). The tax credit rate will vary from 30% to15% for SMEs with assets of more than CDN$50 millionbut less than CDN$75 million (including assets of allassociated corporations). To qualify for this tax measure,a corporation must have generated gross revenue of at least CDN$150,000 and its industrial design activitiesmust be carried out in-house by a qualified salarieddesigner or by a qualified outside consultant.

For a corporation having its industrial design activitiesperformed in-house, eligible salaries correspond to those paid to eligible designers (maximum ofCDN$60,000 per designer). For a corporation having itsindustrial design carried out under a consulting con-tract, qualified expenditures generally represent 65% ofthe fees paid under the contract.

Eligibility of salaried designers and outside consultants is determined by the MDEIE.

Tax incentives for businesses carrying on certain activitiesin various regionsTax exemption for manufacturingand processing SMEs in resource regions A qualified corporation that operates a manufacturing andprocessing (“M&P”) business in one of Québec’s resourceregions can benefit, until December 31, 2010, from a partialtax exemption (75%—which rate may be reduced in certaincircumstances) on Québec income tax, capital tax andemployer’s contributions to the HSF. The corporation must holdan eligibility certificate issued by Investissement Québec.

The Québec resource regions covered by this tax incentive areprescribed regions distant from general metropolitan areas.

To benefit from this tax exemption, a corporation mustsatisfy three key criteria. First, the total paid-up capital ofthe corporation, including the paid-up capital of all associ-ated corporations, must not exceed CDN$20 million. Thetax exemption is reduced if the total paid-up capital fallsbetween CDN$20 million and CDN$30 million. Second, thecorporation must possess establishments solely in one or more of Québec’s resource regions. The third conditionrequires that the corporation’s activities consist primarily incarrying on an M&P business (payroll attributable to the


M&P activities represents more than 50% of the total pay-roll, or more than 50% of the capital cost of all of itsdepreciable property is attributable to M&P activities).

This tax exemption does not apply at the federal level.

Investment tax credit for manufacturing corporationsFor corporations carrying on M&P activities in Québec, a taxcredit was introduced by the 2008-2009 Québec Budget withrespect to investments made in M&P equipment.

The tax credit rate varies depending on the paid-up capitalof the corporation making the investment. This tax credit isalso refundable depending on the level of paid-up capital of a corporation. Generally, rates and refundability are as follows:

> for a corporation with a paid-up capital over CDN$500million on a consolidated basis, the benefit is a 5% non-refundable tax credit regardless of where the eligibleM&P investment is made;

> for a corporation with a paid-up capital under CDN$250million on a consolidated basis, the benefit is a 10%refundable tax credit which, under certain conditions,may be increased up to 40%, if the eligible investment is made in specific remote regions;

> for a corporation with a paid-up capital betweenCDN$250 million and CDN$500 million, the refundableportion of the tax credit is linearly reduced to zero andthe enhanced tax credit rate is linearly reduced to 5%.

Any non-refundable portion of the tax credit may be carriedforward 20 years, and back three years. It should be notedthat aluminum producing corporations and oil refining cor-porations are excluded.

This tax credit is available for eligible investments madebefore January 1, 2016.

Refundable tax credit for the Aluminum ValleyThe tax credit for the Aluminum Valley is based on anincrease in payroll (compared to a reference year) attrib-utable to a corporation’s M&P employees working in anestablishment that is located in the Saguenay-Lac-Saint-Jean region. The tax credit is 20% of such increasein payroll. The activities that qualify for this credit aregenerally as follows:> manufacturing of finished or semi-finished goods

from aluminum that has already undergone primaryprocessing;

> recovery and recycling of waste and residual materi-als resulting from aluminum processing;

> marketing of products when this activity is incidentalto the M&P activities carried on.

This tax credit can be claimed until December 31, 2015 andthe corporation claiming this tax incentive must hold a cer-tificate of eligibility issued by Investissement Québec.

In addition, a corporation eligible for this tax credit mayclaim the investment tax credit for M&P equipment providedit meets the applicable requirements.

Refundable tax credit for maritime regions of QuébecThis tax credit is similar to the tax credit for the AluminumValley. The maritime regions are Bas-Saint-Laurent, Côte-Nord and Gaspésie—Îles-de-la-Madeleine.

The activities that qualify for this credit are generally as follows:

> seafood products;

> marine biotechnology & sea farming;

> wind energy;

> installation or marketing activities that are incidental to the M&P activities carried on.

As of 2008, eligible activities include all M&P activitiescarried on in the Gaspésie—Îles-de-la-Madeleine region.

The rate of this tax credit is 20%. For marine biotechnologyand sea farming activities the tax credit rate can be enhanced.

This tax credit can be claimed until December 31, 2015 andthe corporation claiming this tax incentive must hold a cer-tificate of eligibility issued by Investissement Québec.

In addition, a corporation eligible for this tax credit mayclaim the investment tax credit for M&P equipment providedit meets the applicable requirements.

InvestIng In Québec / 5. Québec tax IncentIves for busInesses 21

Tax incentives for financialbusinessesTax incentives for InternationalFinancial Centres (“IFCs”)The 2010-2011 Québec Budget has significantly changedthe tax incentives available for International FinancialCentres.

All the partial exemptions that an IFC operator currentlyenjoys regarding income tax, capital tax and the employercontributions to the Health Services Fund (HSF) as well asthe deduction in calculating taxable income that an IFCemployee other than a foreign specialist can claim, will bereplaced with a refundable tax credit for the IFC operator ofup to CDN$20,000 per eligible employee on an annual basis.

Operators of existing IFCs may elect, as of March 31, 2010,to claim this new refundable tax credit. Operators of exist-ing IFCs that do not elect the new refundable tax credit maycontinue to be covered by the existing regime untilDecember 31, 2012 where the operator is a corporation.

A partnership will not be eligible for the new measure butmay continue to benefit under the current regime untilDecember 31, 2013.

An IFC employee, who currently claims a deduction in thecalculation of taxable income of up to CDN$50,000 per yearmay continue to receive a tax benefit, which, however, willgradually decline, until December 31, 2013.

These incentives for IFCs and employees of IFCs do notapply at the federal level.

Tax incentives for culturalbusinessesRefundable tax credit for Québecfilm or video production Since January 1, 2009, this refundable tax credit is generallyequal to 35% of the qualified labour expenditures incurredto produce a Québec film or video production.7 The labourexpenditures must not exceed 50% of the aggregate production costs. Consequently, the Québec refundable tax credit may not exceed 17.5%.

The tax credit rate is 45% for French-language productionsand giant-screen film productions. Considering the 50%limit discussed above, the effective tax credit rate is 22.5%.

Other tax credits can be added, if conditions are met, butthe tax assistance in all cases cannot exceed 65% (effectiverate of 32.5% considering the 50% limit on eligible expendi-tures).

This tax credit was recently amended by the 2010-2011Québec Budget so that financial assistance received fromthe Fonds francophone d’aide au développement ciné-matographique or from the Mesure régionale d’aide audémarrage de productions cinématographiques et télévi-suelles constitute excluded amounts for purposes of thiscredit. This amendment is effective January 1, 2009.

Other tax credits available for cultural businessesThe government of Québec offers additional tax incentivesfor cultural businesses such as the refundable tax credit forfilm dubbing, the refundable tax credit for sound record-ings, the refundable tax credit for the production of per-formances and the refundable tax credit for book publishing.

Finally, the 2010-2011 Québec Budget announced that,starting with taxation year 2010, individuals who sojourn inQuébec and hold a key position in a foreign film productionmay be entitled to claim a deduction equal to paymentsreceived in connection with services rendered in Québec aspart of the foreign production.

The information contained in section 5 “Québec Tax Incentives for Businesses”is current as of April 7, 2010.

7. The production has to be certified by the Société de développement des entreprises culturelles ("SODEC"). A similar tax credit exists at the federal level.


6.INVESTISSEMENTQUÉBEC: YOURBUSINESS PARTNER

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes



_ iNdusTriAl

coN-

sTrucTioN

cosTs


_ creATiviTy

_ r&d

_ brAiN+TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


_ lighT meTAls

_ eNergy

_ mATeriAls


_ mulTimediA

_ mAjor liFe

scieNces

ceNTre

_ biophArmAceuTicAl

iNdusTry

_ reAl esTATe

_ eNviroNmeNTAl lAw


_ TAx iNceNTives



_ TAx beNeFiTs


_ AlumiNium vAlley

_ iNTerNATioNAl

FiNANciAl

ceNTres



_ smb FiNANciAl

_ FiscAl meAsures

_ sTrATegic supporT

For iNvesTmeNT

progrAm

_ regioNAl ecoNomic

iNTerveNTioN FuNd

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes



_ iNdusTriAl

coN-

sTrucTioN

cosTs


_ creATiviTy

_ r&d

_ brAiN+TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


_ lighT meTAls

_ eNergy

_ mATeriAls


_ mulTimediA

_ mAjor liFe

scieNces ceNTre

_ biophArmAceuTicAl

iNdusTry

_ reAl esTATe

_ eNviroNmeNTAl lAw


_ TAx iNceNTives



Services customized forinternational businessesWhen it comes to financing and consulting, InvestissementQuébec is the right partner to support your investment projectin Québec. We offer the combined advantages of a financialinstitution and an economic development agency.

Our team of specialists can help you:> gain insight into the challenges and opportunities

for businesses today;

> build productive strategic alliances with local and international partners;

> find a location that suits your exact needs;

> benefit from attractive tax incentives;

> find the right financing solutions, including loans,loan guarantees and working capital.

For international investors, we also do the crucial follow-upwith your investment project from the time you set up yourbusiness until your company is well established in Québec.Whether it’s schooling, housing or helping you adapt here,we can put you in touch with the resources that you need.

Programs and fiscal measures that meet your needsSMB FinancialOur flexible financing products are designed for companiesat every stage: start-up, expansion, export, R&D, mergersand acquisitions. We can provide you with a repaymentguarantee on a term loan, line of credit, or letter of creditgranted by a financial institution. We can also arrange aterm loan if no other form of financing is pos sible. The SMBFinancial program has various segments, which include:interim financing for tax credits; improving productivity;market development outside Québec; export credit; work-ing capital for growth purposes; technological design inno-vation; strategic alliances; international conventions; and,succession.

Fiscal MeasuresIf your business carries out specialized activities or is locatedin a designated region in Québec, it can benefit from somevery advantageous tax credits, which are outlined in Section 5.

Strategic Support for Investment Program (PASI)We can provide you with a loan, interest-free loan, equity-typeloan, loan with interest repayable through royalties or contri -bution repayable through royalties. We can also provide aloan guarantee. Lastly, if no other form of financing is possi-ble, we can provide a non-repayable contribution.

Regional Economic Intervention Fund (FIER)The Regional Economic Intervention Fund (FIER) is a devel-opment fund designed to help companies obtain financing(equity or quasi-equity) at the start-up and developmentstages. It also aims to support the creation of sector fundsand the implementation of development projects, mainly inthe regions.

We also offer tailor-made solutions for foreign investors.

Importance of preparing a business planIn North America, a business plan is key to obtaining anysort of financing and is a basic requirement for govern-ments to discuss financial assistance. Your business planshould include a business concept in which you willdescribe your market potential within your industry andoutline your detailed action plan for the coming years. Youshould describe, among other things, your industry, yourbusiness venture, your business objectives and your mar-keting plan, including your sales strategy.

In addition, your business plan should have a financial planthat outlines the level of present financing and identifies thefinancing your company is seeking, explaining the use of thefunds. It is important that the financial plan be supported byfinancial statements, including a balance sheet, an incomestatement, and a cash flow analysis on a monthly basis.External financing requires the preparation of a compre-hensive business plan that complies with North Americanstandards. Ideally, your business plan should be preparedin collaboration with a local firm that understands therequirements of the financing entities.

24 InvestIng In Québec / 6. InvestIssement Québec: your busIness Partner

7.CONTACT INFORMATION

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes





_ creATiviTy

_ r&d

_ brAiN+TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


_ lighT meTAls

_ eNergy

_ mATeriAls


_ mulTimediA

_ mAjor liFe scieNces ceNTre

_ biophArmAceuTicAl iNdusTry

_ reAl esTATe

_ eNviroNmeNTAl lAw


_ TAx iNceNTives



_ TAx beNeFiTs


_ AlumiNium vAlley

_ iNTerNATioNAl FiNANciAl ceNTres



_ smb FiNANciAl

_ FiscAl meAsures

_ sTrATegic supporT For iNvesTmeNT progrAm

_ regioNAl ecoNomic iNTerveNTioN FuNd

_ NAFTA


_ operATiNg cosT

_ uNiT lAbour

_ elecTriciTy rATes





_ creATiviTy

_ r&d

_ brAiN+TechNology

_ colleges

_ uNiversiTies

_ r&d ceNTres


_ reseArch ceNTres

_ heAlTh

_ iNFormATioN

_ TechNologies


_ lighT meTAls

_ eNergy

_ mATeriAls

Investissement QuébecInvestissement Québec is a government corporation thatencourages foreign businesses to locate and develop inQuébec. Combining the advantages of a financial institutionand an economic development agency, we are an excellentgateway for companies that want to locate in Québec. Wehave the expertise and resources in such fields as site selection,assessment of operating costs, obtaining authorizations andpermits, market evaluation, contacts with competent author -ities and resources to provide support and financing at everystage of an industrial project. To serve our internationalclients, we have representatives in Europe, the U.S. and Asia.

Blake, Cassels & Graydon LLPBlakes is one of Canada's leading business law firmswith more than 550 lawyers in offices in Canada, the U.S.,Europe, China and the Gulf Region. Although we areproudly Canadian, our business spans across borders.For many years, Blakes has advised U.S. and interna-tional companies on significant cross-border legalissues and helped many businesses successfully expandinto Canada. Our U.S. offices in New York and Chicago,our international offices in London, Beijing and Barhainand our associated offices in Al-Khobar and Shangaienable us to provide clients with the very best Canadian

legal advice. Our integrated office network gives clientsaccess to the full spectrum of capabilities found throughoutour firm. Whether an issue is local or multi-jurisdictional,practice area-specific or inter-disciplinary, Blakes can provide effective legal solutions at every level.

DeloitteDeloitte, one of Canada's leading professional servicesfirms, provides audit, tax, consulting, and financial advisoryservices through more than 6,200 people in 50 offices.Deloitte is the Canadian member firm of Deloitte ToucheTohmatsu. We offer a broad range of professional serviceswith one thing in common: helping our clients excel anywherein the world. Our client service teams bring insight andinnovation to the table, working with our clients to createpowerful business solutions tailored to their organization’sneeds, whether global or local in scope. We also combineindustry insight with a deep understanding of today’s localand global business challenges to offer industry-specificservices. Our professionals provide the intelligent, practicaland principled solutions you need to meet today’s challengesand anticipate tomorrow’s.

26 InvestIng In Québec / 7. contact InformatIon

ContactsInvestissementQuébecCanadaMontréal (head office)413, rue Saint-JacquesBureau 500Montréal (Québec) H2Y 1N9CanadaTel.: 1 514 873-43751 866 870-0437 (in North America)Fax: 1 514 873-5786www.investinquebec.biz

United StatesAtlantaQuébec Government Office191 Peachtree St. N.E.Suite 3240Atlanta, GA 30303U.S.A.Tel.: 1 404 584-5340Fax: 1 404 584-2089

ChicagoQuébec Government Office444 N. Michigan AvenueSuite 3650Chicago, Illinois 60611-3977U.S.A.Tel.: 1 312 645-0398Fax: 1 312 645-0542

Los AngelesQuébec Government Office10940 Wilshire Boulevard, Suite 720 Los Angeles, California 90024U.S.A.Tel.: 1 310 209-3332 Fax: 1 310 824-7759

New YorkQuébec Government OfficeOne Rockefeller Plaza, 26th FloorNew York, New York 10020-2102U.S.A.Tel.: 1 212 843-0976Fax: 1 212 757-4753

EuropeLondonQuébec Government Office59 Pall Mall London SW1Y 5JHUnited KingdomTel.: +44 20 7766 5931Fax: +44 20 7766 5939

Munich Québec Government OfficeKarl-Scharnagl-Ring 680539 MunichGermanyTel.: +49 (0) 89 255 49 31-19Fax: +49 (0) 89 2101 9474

ParisQuébec Government Office66, rue Pergolèse75116 Paris FranceTel.: +33 (0)1 40 67 85 26Fax: +33 (0)1 40 67 85 91

StockholmEmbassy of CanadaKlarabergsgatan 23, 6th floorP.O. Box 16129103 23 StockholmSwedenTel.: +46 8 453 3037Fax: +46 8 453 3016

AsiaBeijingCanadian Embassy19 Dongzhimenwai DajieChaoyang DistrictBeijing 100600 ChinaTel.: +86 10 5139 4265Fax: +86 10 5139 4445

MumbaiConsulate General of Canada221, Dr. D.N. Road, Suite 616, 6th floor Fort House (Old Handloom House)Mumbai 400 001 IndiaTel.: +91 22 6749-4486Fax: +91 22 6749-4415

TokyoQuébec Government Office Shiroyama JT Trust Tower32nd Floor, 4-3-1 ToranomonMinato-ku, Tokyo105-6032 JapanTel.: +81 3 5733-4588Fax: +81 3 5472-6721

Blakes CanadaMontréal600, boul. de Maisonneuve OuestBureau 2200Montréal (Québec) H3A 3J2CanadaTel.: 1 514 982-4000Fax: 1 514 [email protected]

Norm SaibilOffice Managing PartnerTel.: 1 514 [email protected] BuggéPartnerTel.: 1 514 [email protected]

Ottawa45 O’Connor StreetSuite 2000, World Exchange PlazaOttawa, Ontario K1P 1A4CanadaTel.: 1 613 788-2200Fax: 1 613 [email protected]

Toronto199 Bay StreetSuite 2800, Commerce Court WestToronto, Ontario M5L 1A9CanadaTel.: 1 416 863-2400Fax: 1 416 [email protected]

Calgary855 2nd Street S.W.Suite 3500, Bankers Hall East TowerCalgary, Alberta T2P 4J8CanadaTel.: 1 403 260-9600Fax: 1 403 [email protected]

Vancouver595 Burrard StreetP.O. Box 49314Suite 2600, Three Bentall CentreVancouver, British Columbia V7X 1L3CanadaTel.: 1 604 631-3300Fax: 1 604 [email protected]

United StatesNew YorkBlake, Cassels & Graydon (U.S.) LLP126 East 56th StreetSuite 801, Tower 56New York, New York 10022-3613U.S.A.Tel.: 1 212 893-8200Fax: 1 212 [email protected]

Chicago181 West Madison StreetSuite 3610Chicago, Illinois 60602-4645U.S.A.Tel.: 1 312 739-3610Fax: 1 312 [email protected]

EuropeLondon23 College Hill5th FloorLondon EC4R 2RPEnglandTel.: +44 20 7429 3550Fax: +44 20 7429 [email protected]

ChinaBeijing7 Dong Sanhuan ZhongluSuite 901, Office Tower ABeijing Fortune PlazaChaoyang DistrictBeijing 100020People’s Republic of ChinaTel.: +86 10 6530 9010Fax: +86 10 6530 [email protected]

Shanghai* Blake, Cassels & Graydon LLP1376 Nan Jing Xi LuSuite 718, Shanghai CentreShanghai 200040People's Republic of China*Associated Office

InvestIng In Québec / 7. contact InformatIon 27

The Gulf RegionBahrainBlake, Cassels & Graydon LLPin association with Dr. Saud Al-Ammari Law Firm5th Floor, GB Corp TowerBahrain Financial HarbourP.O. Box 11005ManamaKingdom of BahrainTel.: +973 17 15 15 00 Fax: +973 17 10 49 48 [email protected]

Al-Khobar*Dr. Saud Al-Ammari Law Firmin association with Blake, Cassels & Graydon LLPApicorp BuildingP.O. Box 1404Al-Khobar 31952Kingdom of Saudi ArabiaTel.: +966 3 847 5050Fax: +966 3 847 [email protected]*Associated Office

DeloitteCanadaMontréal1, Place Ville-MarieBureau 3000 Montréal (Québec) H3B 4T9 Canada Tel.: 1 514 393-7115Fax: 1 514 390-4123

Toronto181 Bay Street Bay Wellington Tower - BCE PlaceSuite 1400 Toronto, Ontario M5J 2V1 Canada Tel.: 1 416 601-6150 Fax: 1 416 601-6151

Calgary3000 Scotia Centre700 2nd Street S.W Calgary, Alberta T2P 0S7 Canada Tel.: 1 403 267-1700 Fax: 1 403 264-2871

Vancouver2800 1055 Dunsmuir Street4 Bentall Centre Vancouver, British Columbia V7X 1P4 Canada Tel.: 1 604 669-4466 Fax: 1 604 685-0395

United StatesNew YorkTwo World Financial Center225 Liberty Street New York, New York 10281-1414 U.S.A. Tel.: 1 212 436-2000Fax: 1 212 436-5000

Los AngelesTwo California Plaza350 S. Grand Ave.Suite 200 Los Angeles, California 90071-3462 U.S.A. Tel.: 1 213 688-0800Fax: 1 213 688-0100

Chicago111 S. Wacker Drive Chicago, Illinois 60606-4301 U.S.A. Tel.: 1 312 486-1000Fax: 1 312 486-1486

Washington, D.C.555 12th St. N.W.Suite 500 Washington, District of Columbia20004-1207 U.S.A Tel.: 202 879-5600Fax: 202 879-5607

United KingdomLondonStonecutter Court1 Stonecutter Street London United KingdomEC4A 4TR Tel.: +44 (0) 20 7936 3000Fax: +44 (0) 20 7583 1198

FranceParis185, avenue Charles-de-Gaulle92524 Neuilly-sur-Seine CedexFranceTel.: +01 40 88 28 00Fax: +01 40 88 28 28

GermanyFrankfurt am MainFranklinstraße 50 60486 Frankfurt am Main Germany Tel.: +49 69 75695-01Fax: +49 69 75695-6333

MünchenRosenheimer Platz 4 81669 München GermanyTel.: +49 89 29036-0Fax: +49 89 29036-8108

ChinaShanghaiDeloitte Touche Tohmatsu CPA Ltd.30/F Bund Center222 Yan An Road East 200002 Shanghai China Tel.: +86 (21) 6141 8888Fax: +86 (21) 6335 0003

Hong KongDeloitte Touche Tohmatsu 35/F One Pacific Place

88 Queensway Hong Kong SAR China Tel.: +(852) 2852 1600Fax: +(852) 2541 1911

BeijingDeloitte Touche Tohmatsu CPA Ltd.8/F Office Tower W2The Towers, Oriental Plaza1 East Chang An Avenue 100738 Beijing China Tel.: +86 (10) 8520 7788Fax: +86 (10) 8518 1218

IndiaMumbaiDeloitte Touche Tohmatsu India Pvt Ltd.12, Dr. Annie Besant Road,Opposite Shiv Sagar Estate,Worli, Mumbai 400 018IndiaTel.: +91 (0) 22 6667 9000Fax: +91 (0) 22 6667 9025

BangaloreDeloitte Touche Tohmatsu India Pvt. Ltd.Deloitte Centre, Anchorage II, 100/2,Richmond Road, Bangalore 560 025IndiaTel.: +91 (0) 80 55276000Fax: +91 (0) 80 55276409

DelhiDeloitte Touche Tohmatsu India Pvt. Ltd.MCT House, One Okhla Centre, BlockA, Okhla, Institutional Area, New Delhi,110 025IndiaTel.: +91 (0) 11 6662 2000Fax: +91 (0) 11 6662 2011

AustraliaSydneyP.O. Box N250 Grosvenor Place225 George Street NSW 1217 SydneyAustraliaTel.: +61 2 9322 7000Fax: +61 2 9322 7001

South AfricaCape TownBrookside, 11 Lansdowne Road,ClaremontP.O. Box 578 Cape Town 8000 South Africa Tel.: +27 (0) 21 670-1500Fax: +27 (0) 21 674-3076

BrazilSão Paulo Rua Alexandre Dumas, 1981 04717-906 São Paulo, SP Brazil Tel.: +55 11 5186-1000Fax: +55 11 5185-2911

28 InvestIng In Québec / 7. contact InformatIon

aPPendIx - oPeratIng costs

COMPARISON OF TOTAL ANNUAL COSTSSeventeen-industry averageIndex: U.S. = 100

Source: KPMG's Guide to International Business Location, 2010 Edition

Québec 92.6

Canada 95.0

United States 100

Australia 97.8

France 98.3

UK 98.2

Netherlands 96.5

Italy 100

Japan 107.6

Germany 102.6

Québec, where the costs are lowerAccording to the 2010 International KPMG comparativestudy for 17 business operations in 136 locations, themain cost factors are, on average, 7.4% lower in Québecthan in the United States.

For the manufacturing industries, the main cost factors are,on average, 4.7% lower in Québec than in the United States.

30 InvestIng In Québec / aPPendIx - oPeratIng costs

0 25 50 75 100 125

COMPARISON OF TOTAL ANNUAL COSTSManufacturing averageIndex: U.S. = 100


Québec 95.3

Australia 99.0

Canada 96.3

United States 100

France 97.9

Italy 98.5

UK 98.4

Netherlands 97.4

Japan 106.0

Germany 100.9

0 25 50 75 100 125

For the R&D industries, the main cost factors are, on average,22.4% lower in Québec than in the United States.

For the software sector, the main cost factors are, on average,17.9% lower in Québec than in the United States.

InvestIng In Québec / aPPendIx - oPeratIng costs 31

COMPARISON OF TOTAL ANNUAL COSTSR&D averageIndex: U.S. = 100


Québec 77.6

Canada 87.1

United States 100

France 93.8

Australia 81.3

Netherlands 83.7

UK 97.1

Italy 106.8

Japan

Germany 110.8

0 25 50 75 100 125

COMPARISON OF TOTAL ANNUAL COSTSCorporate & IT ServicesIndex: U.S. = 100

Source: KPMG's Guide to International Business Location, 2010 EditionNote: Costs are based on products distribution models developped by KPMG

Québec 82.1

Canada 90.2

Australia 98.8

United States 100

France 104.1

Japan 113.7

Netherlands 98.3

UK 97.8

Italy 106.4

Germany 109.7

0 25 50 75 100 125

116.4

4.10.016.AN��05/2010

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