Canada’s FinTech Sector

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Canada’s FinTech Sector: An Overview

• Direct employment: 55,200

• Financial Services Sector employees over 500,000 people in over 36,000 companies

• Major FinTech clusters: Toronto, Montreal, Vancouver, Calgary

• Six of the top 10 safest banks in North America are Canadian, says Global Finance Magazine.

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4

Canada’s FinTech Sector: Landscape

• Mobile Technology:

– Mobile Banking Payments, Apps and Services

• Cloud/Big Data

– Cloud Enabled Services; Big Data and Predictive Analytics

• Risk Management

– Governance and risk reporting

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Canada’s FinTech Sector: Startups

• Financial Crime Detection and Prevention:

– Verafin, nymi, SafePay

• Cybersecurity:

– SecureKey, PHoENIX, sentire

• Payment Tech & E-Commerce

– PopCodes, Sensibill, Shopify, LightSpeed, Crelogix

• Crypto Currency

– Crypto Capital; Blockstream; Wagepoint

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Largest Canadian Fintech VC Deals

• Shopify: $100 Million

• Verafin: $60 million

• Lightspeed Retail: $35 million

• Blockstream: $21 million

• Financeit: $13 million

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Canada’s FinTech Sector: Incentives

• Business Cost Savings

– Lower business costs in the G7

– Lowest costs in software design, financial services, electronics, and telecommunications

– 7.2% lower costs compared to the United States

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Competitive Tax Rates

• Canada’s federal general corporate tax rate declined from 29.1% in 2000 to 15% in 2013

• Provincial tax rates also declined from 13.3% in 2000 to 11.1% in 2013;

• Canada’s innovation-based tax programs incentivize R&D in financial technology. As an emerging sector, FinTech can greatly benefit from experimental development (i.e. technological advancement).

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International Comparison of Statutory General Corporate Tax

Rates in 2014

39.137.0

34.4

30.2

27.526.3

21.0

10

15

20

25

30

35

40

45

U.S. Japan France Germany Italy Canada U.K.

%

Marginal EffectiveTax Rate* on New Business Investment, 2014

39.7

34.7

29.8 29.5

26.5

21.8

17.5

20.1

10

15

20

25

30

35

40

Japan U.S. U.K. France Germany Italy OECD

Average**

Canada

%

Comparative Tax Rates

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SR&ED Tax Incentives

• Companies in Canada that invest in R&D can apply for the SR&ED tax incentives, irrespective of size, sector or field of technology

• Eligible activities

– experimental development,

– applied research,

– basic research,

– certain types of work in support of the experimental development, applied research and basic research.

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SR&ED Continued

• Eligible expenses include:

– wages and salaries of employees engaged in R&D work,

– overhead expenses, and

– materials

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Canada’s FinTech Sector: Incentives

• Highly-Skilled Workforce

– Canada is home to over 55,000 FinTech workers

– Fintech employment has increased 12% since 2008

– Only three other sectors outpaced financial services in technology job creation.

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Flexible Immigration Programs

• The Canada Korea Free Trade Agreement provides access to Korean Business visitors to Canada

• Business Visitors can stay up to 6 months without a visa

• Intra-Corporate Transferees can stay up to 7 years depending on category

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Key CKFTA Benefits

• The CKFTA entered into force on January 1, 2015

• Provides Korean’s Companies located in Canada protection in a form of a guarantee that they are treated the same as Canadian companies.

• Trade in financial services help protect investments.

For more information

Contact

Jonathon Kupi

Jonathon.kupi@international.gc.ca

Sangmyun Kim

Sangmyun.kim@international.gc.ca

02-3783-6000 http://www.tradecommissioner.gc.ca/eng/office.js

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