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Study says Canada maintains cost advantage over US despiterising dollar, with business costs approximately 5.5 percent below those in its southern neighbour.
KPMG: Canadian business costs lowest among G7 countries
Canada leads the G7 countries as the most cost-effective location for business, according to KPMG's 2006 Competitive Alternatives: KPMG's Guide to International Business Costs study that compares business costs in nine industrial countries in North America, Europe and Asia Pacific.
Singapore is the overall leader among the countries studied, with business costs approximately 22.3 percent below those in the US. According to the study, Japan and Germany rank as the most expensive countries in which to do business.
With GDP per capita now on par with some western European nations, Singapore is the first newly industrialized country to be included in Competitive Alternatives.
France and Netherlands ranks third and fourth respectively, with overall business costs lower than in all other European countries, and a cost advantage of approximately 4.4 percent over the US.
Italy and the United Kingdom rank fifth and sixth respectively, with business costs approximately 2 percent below the seventh ranked United States.
Japan and Germany were the most costly places to set businesses, with business costs approximately 7 percent higher than in the United States.
Singapore, the United Kingdom and the Netherlands offer relatively low effective corporate income tax rates for the widest ranges of operations.
Office leasing costs are lowest in Italy, followed by Germany, and the Netherlands.
Cost-Competitiveness: 2006 Rankings by Country
Country Cost Index Rank
Singapore 77.7 1
Canada 94.5 2
France 95.6 3
Netherlands 95.7 4
Italy 97.8 5
United Kingdom 98.1 6
United States 100.0 7
Japan 106.9 8
Germany 107.4 9
__________________________________________________
The benchmark cost index (US = 100) is defined as the average of nine representative US cities.
Source: KPMG's 2006 Competitive Alternatives Study
Canada and International Comparison
The study results were determined using recent exchange rates, with the Canadian dollar valued at US85.2 cents (C$1.1735 per US$).
* Canada ranks second overall and first among the G7 countries for low business costs, with a cost advantage of 5.5 percent over the United
* Combining salary and wage costs along with all benefits, total labour costs are lowest in Singapore, followed by Canada. However, expressed as a percentage of payroll, benefit costs in Canada are lower than in any of the other countries studied.
* Industrial facility costs, including land purchase and factory construction costs, are lowest in Canada, followed by Italy, the United States, and France.
* Canada, along with the United Kingdom and France, are the countries that offer the greatest tax incentives to encourage research and development(R&D) activities.
* Canada offers the lowest electricity costs among all countries studied.
"Even with the strong appreciation of the Canadian dollar relative to the US currency, Canada continues to have a cost advantage relative to the United States," says Mark MacDonald, a director in KPMG's Advisory practice. "The Canadian dollar would have to rise in value by approximately 13 percent, almost to par with the U.S., to bring Canadian cities to a breakeven position with the U.S. in terms of overall business costs. While this would vary from city-to-city and business-to-business, this is still positive news overall for Canada."
The study measured 27 cost components - including labour, taxes, real estate, and utilities - as applied to business operations in nine countries: Canada, France, Germany, Italy, Japan, the Netherlands, Singapore, the United Kingdom and the United States. The research included an analysis of these costs in 128 cities worldwide. The study's basis for comparison was the after-tax cost of startup and operation for 17 types of business, over a 10-year planning horizon.
For larger cities in Canada, Edmonton and Montreal rank as those with the greatest cost advantages relative to the United States. While costs in Toronto and Vancouver are the highest within Canada, and on par with such low-cost U.S. cities as Atlanta and Tampa, these cities do still offer significant cost advantages over most of the large US cities included in the study. Among the smaller cities examined, Canadian cities generally continue to offer lower cost structures than equivalent U.S. cities, even after allowing for the higher value of the Canadian dollar since 2004.
"The advantage seen for many of the Canadian cities relative to the U.S. is generally the result of combination of lower labour costs, including lower employer costs for private medical coverage, lower real estate costs, and lower electricity costs in Canada than in the United States, where deregulation has seen electric costs soar in many regions." KPMG's Mark MacDonald stated. "Various federal and provincial tax cuts over the last decade have also made Canada's tax system more competitive with the U.S., and have contributed to the positive position of the Canadian cities," MacDonald concluded.
KPMG: Canadian business costs lowest among G7 countries
Canada leads the G7 countries as the most cost-effective location for business, according to KPMG's 2006 Competitive Alternatives: KPMG's Guide to International Business Costs study that compares business costs in nine industrial countries in North America, Europe and Asia Pacific.
Singapore is the overall leader among the countries studied, with business costs approximately 22.3 percent below those in the US. According to the study, Japan and Germany rank as the most expensive countries in which to do business.
With GDP per capita now on par with some western European nations, Singapore is the first newly industrialized country to be included in Competitive Alternatives.
France and Netherlands ranks third and fourth respectively, with overall business costs lower than in all other European countries, and a cost advantage of approximately 4.4 percent over the US.
Italy and the United Kingdom rank fifth and sixth respectively, with business costs approximately 2 percent below the seventh ranked United States.
Japan and Germany were the most costly places to set businesses, with business costs approximately 7 percent higher than in the United States.
Singapore, the United Kingdom and the Netherlands offer relatively low effective corporate income tax rates for the widest ranges of operations.
Office leasing costs are lowest in Italy, followed by Germany, and the Netherlands.
Cost-Competitiveness: 2006 Rankings by Country
Country Cost Index Rank
Singapore 77.7 1
Canada 94.5 2
France 95.6 3
Netherlands 95.7 4
Italy 97.8 5
United Kingdom 98.1 6
United States 100.0 7
Japan 106.9 8
Germany 107.4 9
__________________________________________________
The benchmark cost index (US = 100) is defined as the average of nine representative US cities.
Source: KPMG's 2006 Competitive Alternatives Study
Canada and International Comparison
The study results were determined using recent exchange rates, with the Canadian dollar valued at US85.2 cents (C$1.1735 per US$).
* Canada ranks second overall and first among the G7 countries for low business costs, with a cost advantage of 5.5 percent over the United
* Combining salary and wage costs along with all benefits, total labour costs are lowest in Singapore, followed by Canada. However, expressed as a percentage of payroll, benefit costs in Canada are lower than in any of the other countries studied.
* Industrial facility costs, including land purchase and factory construction costs, are lowest in Canada, followed by Italy, the United States, and France.
* Canada, along with the United Kingdom and France, are the countries that offer the greatest tax incentives to encourage research and development(R&D) activities.
* Canada offers the lowest electricity costs among all countries studied.
"Even with the strong appreciation of the Canadian dollar relative to the US currency, Canada continues to have a cost advantage relative to the United States," says Mark MacDonald, a director in KPMG's Advisory practice. "The Canadian dollar would have to rise in value by approximately 13 percent, almost to par with the U.S., to bring Canadian cities to a breakeven position with the U.S. in terms of overall business costs. While this would vary from city-to-city and business-to-business, this is still positive news overall for Canada."
The study measured 27 cost components - including labour, taxes, real estate, and utilities - as applied to business operations in nine countries: Canada, France, Germany, Italy, Japan, the Netherlands, Singapore, the United Kingdom and the United States. The research included an analysis of these costs in 128 cities worldwide. The study's basis for comparison was the after-tax cost of startup and operation for 17 types of business, over a 10-year planning horizon.
For larger cities in Canada, Edmonton and Montreal rank as those with the greatest cost advantages relative to the United States. While costs in Toronto and Vancouver are the highest within Canada, and on par with such low-cost U.S. cities as Atlanta and Tampa, these cities do still offer significant cost advantages over most of the large US cities included in the study. Among the smaller cities examined, Canadian cities generally continue to offer lower cost structures than equivalent U.S. cities, even after allowing for the higher value of the Canadian dollar since 2004.
"The advantage seen for many of the Canadian cities relative to the U.S. is generally the result of combination of lower labour costs, including lower employer costs for private medical coverage, lower real estate costs, and lower electricity costs in Canada than in the United States, where deregulation has seen electric costs soar in many regions." KPMG's Mark MacDonald stated. "Various federal and provincial tax cuts over the last decade have also made Canada's tax system more competitive with the U.S., and have contributed to the positive position of the Canadian cities," MacDonald concluded.
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