MONTREAL Your competitive global financial centre

Transcription

1 MONTREAL Your competitive global financial centre 2010

2 MONTREAL Your competitive global financial centre Contents: 1. Montreal: a snapshot 2. Montreal s financial sector 3. The value-added proposition Proximity to markets Quality of life Talent advantage Low operating costs International Financial Centre incentive 4. Typical business case 5. An excellent reputation 2

3 MONTREAL: A SNAPSHOT Population of 3.8M, 2 nd largest city in Canada GDP of $125 billion 9% of Canada s GDP Strong professional services support (accounting, legal, engineering, asset services) Recognized Canadian leader in: Aerospace Life sciences (larger proportion of employment in pharma than Boston and San Diego) Information technology Finance R&D (Quebec has highest proportion of employment in R&D in Canada) 3

4 MONTREAL S FINANCIAL SECTOR Montreal s financial services industry 3,000 companies Over125,000 jobs 40% in securities, pension funds, and fund management 38% in banking 22% in insurance Local giants include: Home to: The derivatives arm of the TMX Group which recently partnered with the London Stock Exchange The Investment Industry Association of Canada (IIAC) chose TMX s CCDC (Canadian Derivatives Clearing Corporation) to develop a central counterparty facility for the fixed income market Finance related IT expertise thanks to CGI and Morgan Stanley (Over 7,000 jobs) Large talent pool in financial and actuarial mathematics 4

5 THE VALUE-ADDED PROPOSITION A COMPETITIVE GLOBAL FINANCIAL CENTRE Proximity to large markets Local market potential Montreal s pension funds among largest in Canada Strategic location International city Large talent pool Centre for innovation Low cost rent Low salaries Lowest corporate income tax rate in North America (29.9%) An appealing business case 30% refundable tax credit Approx. 7% reduction in corporate taxation compared to Toronto % personal income tax exemption for foreign specialists 5 5

6 YOUR TALENT ADVANTAGE Montreal: Shaping your new talent strategy in a changing world Highly educated workforce and diverse talent (+/- 50,000 immigrants per year) Strong support from universities (COOP programs, placement) Centre for Innovation: Ranks first in Canada for amount of research funding 30 units of academic research specifically in the areas of derivative products, portfolio management, finance engineering, and financial accounting CFA Association is the 10 th largest worldwide with more than 2,000 members (highest rate per capita) Approximately 40,000 accredited accountants in Quebec In Montreal, over16,000 (CA 7,131; CMA 4,600; CGA 4,725) Ranks 1 st in North America for the number of university students per capita 168,000 university students, including 20,000 foreigners of which: HEC Montréal MBA Makes the Forbes Top 10 - Only Canadian school in the top one-year program ranking close to 8,000 students enrolled in finance related programs each year close to 400 graduate diplomas given every year (Masters and Ph.D.) According to the prestigious Times Higher Education Supplement survey 2009, McGill University is the best public university in North America and ranks 18 th among the world s top 200 universities Source : Montreal International Attractiveness Indicators

7 YOUR TALENT ADVANTAGE (CONT D) Languages spoken in Montreal The most trilingual population in Canada: nearly 20% of the population is fluent in at least three languages Over 50% is fluent in both French and English 80 languages spoken Source: Statistics Canada, 2006 Census and Association of Canadian Studies 7 7

8 LOW OPERATING COSTS Wages The average median base salary in Montreal is 5.4% lower than in Toronto Source: Economic Research Institute (ERI), April

9 LOW OPERATING COSTS Benefits in kind 9 9

10 LOW OPERATING COSTS Real Estate Weighted Average Class A Gross Rental (CBD) City Rate (USD/s.f.) Price difference with Montreal New York % Toronto % Vancouver % Miami % Montreal Boston (8.7%) The average gross cost of Class A real estate rental is over 60% cheaper in Montreal than in Toronto CBD = Central Business District Source: Global Market Rents, CB Richard Ellis, November 2009 Methodology: Local office costs are reported in USD on a per annum basis. This number reflects all occupancy costs, and therefore corresponds to gross rents. One USD = 1.07 CAD 10 10

11 INTERNATIONAL FINANCIAL CENTRE INCENTIVE Corporation Corporate Incentive An unlimited* annual refundable tax credit of 30% on salaries paid to employees of an IFC (capped at $20,000 per job per year representing a salary of $66,667) Eligibility Employee Benefits 1) Local Activities Employees*: must involve at least one of the 25 Qualified A deduction International of 37.5% Financial (up to a maximum Transactions of $50,000) (QIFT) see appendix of remuneration from the IFC in calculating taxable income The Financial Transaction must cross a border: *unlimited in time and amount 2) Foreign Employees For : local client transaction regarding foreign product A deduction in the calculation of all taxable income Fiscal impact for the corporation (over one year) for a period of five years: For foreign client transaction regarding either Salary paid $40K $50K $66.67K $75K Year 1: 100% local or foreign product Year 2: 100% Tax credit per $12K $15K $20K $20K The transactional decision process must be conducted in Year 3: 75% job Montreal Year 4: 50% Tax credit for $1.2M $1.5M $2.0M $2.0M The operations must be conducted by a corporation and Year 5: 37,5% 100 employees employ at least 6 employees Tax credit for 200 employees Tax credit for 300 employees $2.4M $3.0M $4.0M $4.0M $3.6M $4.5M $6.0M $6.0M 11

12 INTERNATIONAL FINANCIAL CENTRE INCENTIVE Qualified International Financial Transactions (QIFT) 1. Dealing in securities 2. Clearing house services 3. Investment advising and portfolio management 4. Deposits 5. Loans 6. Loans and deposits among IFCs 7. Acceptance or issuance of letters of credit 8. Financing by means of a bill of a exchange 9. Foreign exchange operations 10. Financial packaging (engineering) 11. Development or design of new financial products 12. Insurance brokerage 13. Reinsurance 14. Fiduciary services 15. Factoring services 16. Financial leasing 17. Organisation of a qualified investment fund 18. Administration of a qualified investment fund 19. Management of a qualified investment fund 20. Distribution of the shares of a qualified investment fund 21. International treasury management 22. Back-office operations 23. Documentary collection 24. Activities performed under the Quebec Immigrant Investor Program 25. Discount operations carried out regarding a letter of credit or a commercial instrument 12 12

13 Employee Benefits The IFC incentive summarized: INTERNATIONAL FINANCIAL CENTRE INCENTIVE Foreign experts Foreign Employee Benefits A deduction in the calculation of all taxable income for a period of five years: Year 1: 100% Year 2: 100% Year 3: 75% Year 4: 50% Year 5: 37.5% As a foreign employee, you could save $176, over 5 years by working out of Montreal instead of Toronto* *Assumptions: $250,000 annual base salary 2009 income tax rates have been applied to the 5 year payroll computation Income tax rates have been computed assuming the employee has a spouse and four children as dependents 13 13

14 Quebec personal tax Year 1 $ (A) INTERNATIONAL FINANCIAL CENTRE INCENTIVE Foreign experts and local employees (cont d) Year 2 $ (A) Year 3 $ (B) Year 4 $ ( C) Year 5 $ (D) Total Gross earnings Deductions Quebec pension plan Quebec parental Insurance plan Unemployment Insurance contribution Salary before income tax deductions Federal income tax Quebec income tax Net earnings Assumptions (A)100% Quebec tax exemption on salary earned from an International Financial Centre for years 1 and 2 (B) 75% Quebec tax exemption on salary earned from an International Financial Centre for year 3 (C) 50% Quebec tax exemption on salary earned from an International Financial Centre for year 4 (D) 37.5% Quebec tax exemption on salary earned from an International Financial Centre for year income tax rates have been applied to the 5 year payroll computation Income tax rates have been computed assuming that the employee has a spouse and 4 children as dependents 14 14

15 Ontario personal tax INTERNATIONAL FINANCIAL CENTRE INCENTIVE Foreign experts and local employees (cont d) Year 1 $ Year 2 $ Year 3 $ Year 4 $ Year 5 $ Total Gross Salary Deductions OPP EI Salary Before Tax Deductions Federal Tax Ontario Tax Net earnings Assumptions 2009 income tax rates have been applied to the 5 year payroll computation Income tax rates have been computed assuming that the employee has a spouse and 4 children as dependents Total net savings of $176, over 5 years 15 15

16 INTERNATIONAL FINANCIAL CENTRE INCENTIVE Corporation (Cont d) A North American comparison of corporate tax rates The corporate tax rate in Montreal is 7% lower than in Toronto Corporate Income Taxation Rates 2010 North America Effective Tax Rate (%) Federal Province/State City Total Out of City reference Difference with Montreal Montreal 18.00* Toronto 18.00* % Chicago % Boston % New York % *The federal tax rate in Canada will drop to 16.5% in 2011 and 15% in 2012 Source: January

17 MONTREAL S COST ADVANTAGE Summarized Cost comparison for a 20 FTE financial services back office in Montreal Cost +30% Percentage difference between Montreal and other cities Montreal Toronto Boston Chicago New York Base 9.7% 25.2% 15.7% 46.2% 17 17

18 IBM-PLI LOCATION BENCHMARKING TOOL Cost quality map for financial services North America March

19 TYPICAL BUSINESS CASE Maples Finance: On October 1 st 2009, Maples Finance, an independent global fund administrator that provides fiduciary, accounting and administrative services, announced the opening of a Montreal office to service the North American region and its growing fund administration business. Maples Finance selected Montreal for its position as a global financial centre and gateway to North American markets. The resources and advantages the city offers global financial service companies include: a base of highly trained local financial services and technology professionals; a large cosmopolitan city with a welleducated population; a diverse demographic and multi-lingual capabilities; and world-class universities. Maxine Rawlins, CEO of Maples Finance described the Montreal office as a long-term investment in developing a regional hub that expands Maples Finance s global footprint. «We will look to grow our onshore fund administration business particularly in North America. Opening an office in Montreal expands Maples Finance s global presence. With offices in seven jurisdictions, we decided to expand into Montreal for its highly trained workforce, its established financial expertise and proximity to North American financial centres.» Maxine Rawlins, Chief Executive Officer Maples Finance Fund Administrator, May

20 IFC - MONTREAL IFC - Montreal is a private corporation dedicated to developing the financial services sector of the City of Montreal We help you by: 1. Determining whether your company is eligible for the IFC Measure and guiding you through the process 2. Providing expertise and counselling on financial tax incentives 3. Connecting you to our network of partners and collaborators to optimize your business opportunities 4. Answering your requests for information 20 20

21 OTHER INCENTIVES Labour Training Program The financial assistance offered by Emploi-Québec is flexible. For example, it can apply to either labour force training costs or recruitment expenses. The financial assistance will vary between 25% to 50% of eligible expenses depending on the number of jobs created and location. Grant allowed for the creation of more than 50 jobs: Up to 25% of eligible training expenses (max $4M) Up to 50% of human resource management services (max $100,000) 21 21

22 AN EXCELLENT REPUTATION «We are delighted to expand our internal operations in Montreal, one of Canada s leading financial centers that is well regarded for its highly skilled talent base» Jim Rosenthal, Managing Director Morgan Stanley, May 2008 Thank you! John Rooke Vice-president, Business Development International Financial Centre - Montreal 404 St. Dizier Street Montreal (Quebec) Phone: john.rooke@cfimontreal.com 22