canada’s cost and tax advantages – clinical trials · advantages – clinical trials canada...
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INVEST IN
CANADArsquoS COST AND TAX ADVANTAGES ndash CLINICAL TRIALS
Canada represents a global player in the field of clinical trials According
to the website centerwatchcom as of October 2016 Canada had more
than 4500 clinical trials in progress ranking seventh in the world One of
the keys to Canadarsquos success in this field is a competitive environment for
business costs and business taxes
In its 2016 study of global business locations Competitive Alternatives 1
KPMG found that Canada offers the lowest business cost structure and
the lowest business tax burden among the G7 countries for clinical trials
Details of these findings are presented below reflecting business costs
and taxes for a firm providing management services for the operation of
clinical trials in a private (non-hospital) facility
CLINICAL TRIALS MANAGEMENT COST INDEX G7 RESULTS (US = 1000)
CANADA 704
FRANCE 721
ITALY 803
UNITED KINGDOM
JAPAN
833
903
GERMANY 911
UNITED STATES BASELINE
200 40 60 80 100
CANADArsquoS COST HIGHLIGHTS Clinical trials administration firms based in Canada benefit from total labour costs 304 percent lower than equivalent costs in the US Competitive salary levels and lower healthcare costs in Canada contribute to these savings
Leasing costs for suburban office space in Canadarsquos major cities are low relative to most G7 countries with savings of 34 percent compared to the G7 average for this facility
Power-hungry servers benefit from affordable electricity in Canada with power costs that are 34 percent below the G7 average
Taxes and incentives represent the final component of Canadarsquos cost advantage as detailed on the next page
Combining all cost factors Canada has the lowest business cost environment among all G7 countries with total business costs 296 percent below the US
IMPACT OF EXCHANGE RATES The 2016 edition of Competitive Alternatives was released in March 2016 The results from that study including the results reported here reflect exchange rates that were in effect in the fourth quarter of 2015 These results are sensitive to exchange rate changes
During 2016 the Canadian dollar has appreciated modestly in value relative to the US dollar For the model clinical trials firm Canadarsquos cost advantage relative to the United States decreases marginally from 296 percent to 280 percent at September 2016 exchange rates The continued strength of the US dollar provides Canada with a clear cost advantage for clinical trials management firms
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418
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INVEST IN
LOW-COST HOT SPOTS Rank among 103 G7 cities and business cost index (US = 1000)
4 Halifax 649
6 City of Queacutebec 653
9 Vancouver 687
11 Montreacuteal 690
15 Edmonton 703
17 Toronto 718
18 Calgary 723
CANADArsquoS TAX HIGHLIGHTS2
Clinical trials operations are highly RampD-intensive As a result Canadarsquos generous RampD tax credits reduce the effective rate of corporate income tax for this model firm to just 36 percent the second lowest in the G7
Canadarsquos statutory labour costs are the lowest in the G7 and its costs for other corporate taxes are also low ranking third among the G7 countries
Overall Canadarsquos total tax index for this clinical trials management firm is 353 This gives Canada the lowest net tax position in the G7 by a wide margin and reflects total tax costs 647 percent lower than in the United States
CLINICAL TRIALS MANAGEMENT TOTAL TAX INDEX2 G7 RESULTS (US = 1000)
CANADA 353
UNITED KINGDOM 566
FRANCE 568
UNITED STATES BASELINE
JAPAN 1498
GERMANY 1695
ITALY 1749
0 30 60 90 120 150 180
SUMMARY OF OPERATING PARAMETERS
BUSINESS OPERATION CLINICAL TRIALS MANAGEMENT
Facilities requirements Class A office space leased (929 m2) 10000 ft2
Workforce Management 3 Sales and administration 9 Dedicated product development 38
Total employees 50
Other initial investment requirements Office equipment - US $rsquo000 Equity financing - of project costs
$150 85
Energy requirements Electricity monthly consumption 25000 kWh
Other annual operating characteristics Sales at full production - US $rsquo000 $8000 Operating costs - of sales 5 Investment in tax-eligible RampD - of sales 58
1 Competitive Alternatives KPMGrsquos Guide to International Business Location Costs and Competitive Alternatives Special Report Focus on Tax Available for download from CompetitiveAlternativescom 2 Calculations by MMK Consulting Inc based on detailed data from Competitive Alternatives Special Report Focus on Tax as that report only published sector-level tax results
Follow us on Twitter invest_canadaFind out more at wwwinvestincanadacom
11
9
17
15
418
6
INVEST IN
LOW-COST HOT SPOTS Rank among 103 G7 cities and business cost index (US = 1000)
4 Halifax 649
6 City of Queacutebec 653
9 Vancouver 687
11 Montreacuteal 690
15 Edmonton 703
17 Toronto 718
18 Calgary 723
CANADArsquoS TAX HIGHLIGHTS2
Clinical trials operations are highly RampD-intensive As a result Canadarsquos generous RampD tax credits reduce the effective rate of corporate income tax for this model firm to just 36 percent the second lowest in the G7
Canadarsquos statutory labour costs are the lowest in the G7 and its costs for other corporate taxes are also low ranking third among the G7 countries
Overall Canadarsquos total tax index for this clinical trials management firm is 353 This gives Canada the lowest net tax position in the G7 by a wide margin and reflects total tax costs 647 percent lower than in the United States
CLINICAL TRIALS MANAGEMENT TOTAL TAX INDEX2 G7 RESULTS (US = 1000)
CANADA 353
UNITED KINGDOM 566
FRANCE 568
UNITED STATES BASELINE
JAPAN 1498
GERMANY 1695
ITALY 1749
0 30 60 90 120 150 180
SUMMARY OF OPERATING PARAMETERS
BUSINESS OPERATION CLINICAL TRIALS MANAGEMENT
Facilities requirements Class A office space leased (929 m2) 10000 ft2
Workforce Management 3 Sales and administration 9 Dedicated product development 38
Total employees 50
Other initial investment requirements Office equipment - US $rsquo000 Equity financing - of project costs
$150 85
Energy requirements Electricity monthly consumption 25000 kWh
Other annual operating characteristics Sales at full production - US $rsquo000 $8000 Operating costs - of sales 5 Investment in tax-eligible RampD - of sales 58
1 Competitive Alternatives KPMGrsquos Guide to International Business Location Costs and Competitive Alternatives Special Report Focus on Tax Available for download from CompetitiveAlternativescom 2 Calculations by MMK Consulting Inc based on detailed data from Competitive Alternatives Special Report Focus on Tax as that report only published sector-level tax results
Follow us on Twitter invest_canadaFind out more at wwwinvestincanadacom