INTERNATIONAL FINANCIAL SECTOR REPORT RELEASED
VICTORIA – A new report on British Columbia’s International Financial Activity (IFA) program recommends enhancements that would position Vancouver as a premier centre for international commerce and support jobs and expansion in the growing clean technology, green economy and digital media sectors, Finance Minister Colin Hansen announced today.
“British Columbia’s prowess and potential in green building and carbon-emission management are showcased in the venue architecture, clean technology and carbon offsets sourced for the 2010 Winter Olympic and Paralympic Games,” said Hansen. “As with our athletes, give B.C. businesses the opportunity and they can go head-to-head with the world. Growing the $35-billion B.C. financial sector by attracting international professionals, head offices and capital to our diverse, multilingual and highly educated workforce will not only generate high-quality financial jobs, but also foster a pool of venture capital to leverage B.C.’s Renaissance Fund to support jobs and innovation in the sectors of our economy’s future.”
The Province intends to introduce legislation that will incorporate many of the recommendations contained in the report. The report recommends expanding the IFA program in a number of areas including:
- Digital media publishing and distribution.
- Clean technology.
- Management of investment funds.
- Companies providing services related to certifying and trading carbon credits to non- residents.
“Vancouver is becoming a more prominent player on the global financial stage and is now set to establish itself as a leading destination,” said Iain Black, Minister of Small Business, Technology and Economic Development. “A strong IFA program will ensure Vancouver and British Columbia remain competitive and attractive to international investors who are seeking a safe and stable place to invest.”
The report highlighted many of Vancouver’s existing strengths that benefit financial services firms, including favourable tax treatment, a labour pool of more than 100,000 finance professionals, and an educated and multilingual workforce with global connections. The city is currently ranked 29th on the Global Financial Centres Index, three spots ahead of Montreal.
The report also points to the leadership of sectors in British Columbia’s economy that would most benefit from the strengthening of Vancouver as a centre for global finance, such as:
- The clean technology sector, which has attracted global attention and investment in a market projected to double to US $2,740 billion by 2020.
- The carbon trading sector, where there is a significant opportunity for B.C. to become a centre for such functions of the carbon market as the management of the sale and purchase of carbon offsets or renewable energy certificates through financing, verification and accounting.
- The digital media sector, which in B.C. is comprised of more than 1,000 companies that employ over 15,000 people and generate gross annual revenue of $1.2-$1.4 billion, 40 per cent of which comes from sales to the U.S. and European Union. PricewaterhouseCoopers estimates the U.S. entertainment market will grow at 4.8 per cent per year to $759 billion in 2012, with digital and mobile distribution accounting for 24 per cent of the growth in the next three years.
The report was prepared by the Vancouver International Financial Sector Steering Committee. The steering committee was established in 2009 to provide recommendations to the Province on enhancing Vancouver as a top-tier international financial centre.
“The report identifies improvements to the existing program that could create more than 13,000 full-time jobs and contribute an additional $1.3 billion to the provincial economy,” said co-chair Milton Wong. “The powerful ripple effect of these changes would also generate significant new investment and commerce in many other different sectors of our economy.”
“Through expansion of the existing IFA program, B.C. has an opportunity to capitalize on the reputation and strength of the Canadian financial system by promoting itself internationally and increasing economic activity and benefits,” said co-chair Tracey Orr.
The IFA program was established in 1988 to draw international financial activity to B.C. In 2004, the program was expanded to include additional international financial activities and expand eligibility for tax refunds under the program. Qualifying activities include lending, treasury functions, factoring trade account receivables, distributing film and television rights, leasing property, certain insurance and foreign exchange activities, back-up office, administrative support services and commercialization of life science and green related patents.
B.C. INTERNATIONAL FINANCIAL ACTIVITY PROGRAM
B.C.’s International Financial Activity (IFA) program was introduced to further develop Vancouver as an international financial centre.
The legislative framework for the IFA program is the International Financial Activity Act (IFAA), which took effect on September 1, 2004. The IFAA replaced the International Financial Business (Tax Refund) Act.
The IFA program provides eligible corporations with a refund of provincial corporate income tax paid on qualifying activities:
o A corporation may receive an annual refund of up to 100 per cent of the provincial corporate income tax paid on income earned from eligible activities transacted with a non-resident of Canada.
o To qualify for a refund, a corporation must be registered under the IFA program and be incorporated in Canada with a permanent establishment in B.C.
o Qualifying activities include: making loans, factoring trade accounts receivables, distribution of film and television rights, leasing property, captive insurance activities, foreign exchange activities, back-up office and administrative support services.
The IFA program also provides refunds of up to 75 per cent of corporate provincial income tax on income from the commercialization of certain types of life science and “green” patents.
The IFA program is administered by the Ministry of Finance. To qualify for the program, registration with the Ministry of Finance is required. Successful applicants must also become members of the International Financial Centre BC, a non-profit society with a mandate to promote international financial activity in B.C.
