Tuesday, April 24, 2007

Government against Foriegn Investment by Canadian Companies

In today's ROB about a European banking merger, Europe's Mega Banking Deal, in its implications for Canadian Bank ambitions there is this odd detail. It is now more expensive from a tax perspective for Canadian Companies to buy foreign companies than the other way around. Why?

A banking source complained that, even if BMO had the cash to do the deal, a new measure in the federal budget that removes a tax deduction for companies expanding abroad would make it less attractive.

The extra federal tax on a $21-billion deal would be hundreds of millions of dollars per year, said one accountant who asked not to be named.

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