New tax refunds on import letters of credit (L/Cs) are being introduced in British Columbia (BC) as part of a suite of measures meant to stimulate international trade and create jobs in the province.

The new International Financial Activity Act provides for tax refunds on a range of international business activities, adds new types of eligible business activities and expands the type of corporations eligible for tax refunds in Canada's gateway to the Asia-Pacific.

International boost

Import L/Cs used by Canadians to buy foreign goods are eligible under the new act whereas previously only export L/Cs for foreign purchasers were eligible.

Other international business activities that will qualify for a refund include treasury functions on behalf of non-residents, back office operations such as accounting and bookkeeping on behalf of non-residents and back-up operations such as maintaining back-up databases for out-of-country operations.

A wider range of foreign exchange transactions also qualify for tax refunds under the act.

Visionary

New types of business activities such as the distribution of film and television rights outside Canada are eligible under the new legislation that also removes the location requirement that previously required qualifying businesses to be located in the Greater Vancouver Regional District.

Business leaders regard the act as an effective way to boost economic development in the province. "This is one of the most visionary pieces of financial legislation in British Columbia in years," according to president of the International Financial Centre in Vancouver, Robert Fairweather.

International competition

"This paves the way for BC to compete with other international financial centres like Singapore, Dublin, and Amsterdam, and we expect to see an increasing number of companies setting up offices in the province," he adds.

The eligibility changes will take effect on 1 September 2004.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.