This document discusses Montreal's competitive advantages as a global financial center. It highlights that Montreal has a large financial sector with over 3,000 companies and 125,000 jobs. It also notes Montreal's proximity to major North American markets, high quality of life, large talent pool, and low operating costs compared to other financial centers in North America. The document provides details on Montreal's tax incentives for the financial sector through its International Financial Centre program and other labor training programs. It concludes with an example of Maples Finance, an independent global fund administrator, that established operations in Montreal to take advantage of the competitive business environment.
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Value Proposition IFC Montreal (To) (2)
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
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3. MONTREAL: A SNAPSHOT
• Population of 3.8M, 2nd largest city in Canada
• GDP of $125 billion 9% of Canada’s GDP
• Approx. 1 hour flight to New York, Boston,
Toronto, Washington, and Philadelphia and 2
hours flight to Chicago.
• 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 the highest proportion of
employment in R&D in Canada
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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
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5. THE VALUE-ADDED PROPOSITION
Access to 65% of Low International A COMPETITIVE
Your talent
North American operating Financial Centre GLOBAL FINANCIAL
advantage
markets costs status CENTRE
• Proximity to large • International city • Low cost rent • 30% refundable tax
markets credit
• Large talent pool • Low salaries
• Local market • 37.5 - 100% personal
• Centre for • Among lowest
potential income tax exemption
innovation corporate income
for foreign specialists
• Montreal’s pension tax rates in North
funds among America (29.9%)
largest in Canada
• An appealing
• Strategic location business case
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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 10th largest worldwide with more than 2,000 members (highest rate per capita)
• Approximately 40,000 accountants accredited each year in Quebec
In Montreal, over16,000 (CA 7,131; CMA 4,600; CGA 4,725)
• Ranks 1st in North America for the number of university students per capita
168,000 university students, including 20,000 foreigners of which:
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
HEC Montréal MBA Makes the Forbes Top 10
Supplement survey 2009, McGill University is the best
Only Canadian school in the top one-year program ranking
public university in North America and ranks 18th
among the world’s top 200 universities
Source : Attractiveness Indicators 2009-2010
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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 3 languages
• Over 50% is fluent in both French and English
… 80 languages spoken
Source: Statistics Canada, 2006 Census and Association of Canadian Studies
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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 2010
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10. LOW OPERATING COST
REAL ESTATE
Weighted Average Class A Gross Rental (CBD) The average gross cost of “Class A”
rental is 52% more expensive in Toronto
City Rent price (USD/s.f.)
Price difference with than in Montreal
Montreal
New York 64.51 63.6%
Toronto 59.86 51.9%
Vancouver 55.49 40.8%
Miami 44.73 13.5%
Boston 40.52 2.8%
Montreal 39.42 -
CBD = Central Business District
Source: Global Market Rents, , May 2010
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.
1 USD = 1.02 CAD
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11. LOW CORPORATE TAX RATES
A NORTH AMERICAN COMPARISON OF CORPORATE TAX RATES
Corporate Income Taxation Rates – 2010
North America
Effective Tax Rate (%)
Federal Province/State City Total Difference
with Montreal
Montreal 18.00* 11.90 -- 29.90 --
Toronto 18.00* 12.00 -- 30.00 0.3%
Chicago 32.45 7.30 -- 39.75 32.9%
Boston 31.94 8.75 -- 40.69 36.1%
New York 29.00 7.10 10.05 46.18 54.4%
* The federal tax rate in Canada will go down to 16.5% in 2011 and 15% in 2012
Source: January 2010
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12. INTERNATIONAL FINANCIAL CENTRE INCENTIVE
CORPORATION
Corporate Incentive ELIGIBILITY
An unlimited* annual refundable tax credit of • Activities must involve at least one of the 25
30% on salaries paid to employees of an IFC Qualified International Financial Transactions
(capped at $20,000 per job per year (QIFT) – see appendix
representing a salary of $66,667)
• The Financial Transaction must cross a border:
*unlimited in time and amount
For local client transaction regarding
Fiscal impact for the corporation (over one year) foreign product
For foreign client transaction
Salary paid $40K $50K $66.67K $75K
regarding either local or foreign product
Tax credit per $12K $15K $20K $20K
job • The transactional decision process must be
conducted in Montreal
Tax credit for $1,2M $1,5M $2,0M $2,0M
100 employees • The operations must be conducted by a
Tax credit for $2,4M $3,0M $4,0M $4,0M corporation and employ at least 6 employees
200 employees
Tax credit for $3,6M $4,5M $6,0M $6,0M
300 employees
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13. INTERNATIONAL FINANCIAL CENTRE INCENTIVE
QUALIFIED INTERNATIONAL FINANCIAL TRANSACTIONS (QIFT)
1. Dealing in securities 14. Fiduciary services
2. Clearing house services 15. Factoring services
3. Investment advising and portfolio 16. Financial leasing
management 17. Organisation of a qualified investment fund
4. Deposits 18. Administration of a qualified investment
5. Loans fund
6. Loans and deposits among IFCs 19. Management of a qualified investment
7. Acceptance or issuance of letters of credit fund
8. Financing by means of a bill of a exchange 20. Distribution of the shares of a qualified
9. Foreign exchange operations investment fund
10. Financial packaging (engineering) 21. International treasury management
11. Development or design of new financial 22. Back-office operations
products 23. Documentary collection
12. Insurance brokerage 24. Activities performed under the Quebec
13. Reinsurance Immigrant Investor Program
25. Discount operations carried out regarding a
letter of credit or a commercial instrument
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14. INTERNATIONAL FINANCIAL CENTRE INCENTIVE
FOREIGN EXPERTS
THE IFC INCENTIVE SUMMARIZED:
As a foreign employee, you could save
$176,136.80 over 5 years by working out of
Montreal instead of Toronto*
Foreign Employee Benefits
*Assumptions:
A deduction in the calculation of all taxable
income for a period of five years: • $250,000 annual base salary
• 2009 income tax rates have been applied to the 5 year
payroll computation
Year 1: 100% • Income tax rates have been computed assuming the
Year 2: 100% employee has a spouse and four children as dependents
Year 3: 75%
Year 4: 50%
Year 5: 37.5%
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15. INTERNATIONAL FINANCIAL CENTRE INCENTIVE
FOREIGN EXPERTS AND LOCAL EMPLOYEES (CONT’D)
QUEBEC PERSONAL TAX
Year 1 Year 2 Year 3 Year 4 Year 5
$ $ $ $ $ Total
(A) (A) (B) ( C) (D)
Gross earnings 250 000.00 250 000.00 250 000.00 250 000.00 250 000.00 1 250 000.00
Deductions
Quebec pension plan 2 118.06 2 118.06 2 118.06 2 118.06 2 118.06
Quebec parental Insurance plan 300.08 300.08 300.08 300.08 300.08
Unemployment Insurance contribution 583.74 583.74 583.74 583.74 583.74
3 002.42 3 002.42 3 002.42 3 002.42 3 002.42
Salary before income tax deductions 246 997.58 246 997.58 246 997.58 246 997.58 246 997.58
Federal income tax 48 427.00 48 427.00 48 427.00 48 427.00 48 427.00
Quebec income tax - - 6 578.00 20 965.00 28 465.00
Net earnings 198 570.58 198 570.58 191 992.58 177 605.58 170 105.58 936 844.90
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 5
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
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16. INTERNATIONAL FINANCIAL CENTRE INCENTIVE
FOREIGN EXPERTS AND LOCAL EMPLOYEES (CONT’D)
ONTARIO PERSONAL TAX
Year 1 Year 2 Year 3 Year 4 Year 5
Total
$ $ $ $ $
Gross Salary 250 000.00 250 000.00 250 000.00 250 000.00 250 000.00 1 250 000.00
Deductions
OPP 2 118.60 2 118.60 2 118.60 2 118.60 2 118.60
EI 731.79 731.79 731.79 731.79 731.79
2 850.39 2 850.39 2 850.39 2 850.39 2 850.39
Salary Before Tax Deductions 247 149.61 247 149.61 247 149.61 247 149.61 247 149.61
Federal Tax 58 019.00 58 019.00 58 019.00 58 019.00 58 019.00
Ontario Tax 36 989.00 36 989.00 36 989.00 36 989.00 36 989.00
Net earnings 152 141.61 152 141.61 152 141.61 152 141.61 152 141.61 760 708.10
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 $176,136.80 OVER 5 YEARS
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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%
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19. 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)
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20. TYPICAL BUSINESS CASE
MAPLES FINANCE:
ON OCTOBER 1ST 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 WELL-EDUCATED
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 2009
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21. 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
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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)
514-287-1540
JOHN.ROOKE@CFIMONTREAL.COM
WWW.IFCMONTREAL.COM
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