Tax Factors affecting International Competitiveness: Canada vs. United States Perspective
Odette M. Pinto, PhD., MBA, CPA-CGA

Abstract
Globalization has created a competitive environment for corporations. In addition, trade agreements between countries emphasize the need for international competitiveness, as corporations can move business operations across borders, for example between Canada and the United States. Corporate income tax rates significantly impact international competitiveness. In addition, other taxes and fees increase the overall tax burden of a corporation. The tax and economic policy literatures have examined various factors affecting international competitiveness, including reference to some tax factors. This paper extends this literature by critically examining the key factors in Canada’s tax system that affect its international competitiveness and analyzing these factors in assessing the international competitiveness of Canada and the United States. The paper focuses on an examination of five key tax factors, corporate income tax rates, other taxes and fees, capital allowances, complexity of the tax system and tax policy in foreign direct investment.

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