The multinational is lured by corporate tax breaks from the province
Gillian Shaw
Sun
British Columbia’s International Finance Centre scored a coup Monday with the announcement by BASF Corp., the North American affiliate of the multi-billion dollar German chemical giant BASF AG, that it is opening a financial subsidiary here to take advantage of the province’s corporate tax breaks.
The announcement marks the first major international company to set up shop in the province as a result of corporate tax breaks here, and it signifies a win for B.C. over competing jurisdictions across North America.
“I think it is a coup, this is the first big international firm that we have signed up under the International Financial Activities Act,” said Robert Fairweather, president of B.C.’s International Financial Centre. “Our membership to date has basically been Canadian-based companies that have moved an office or established an office here to take advantage of the legislation.
“This adds a lot more creditability when we are able to say a huge international firm like BASF has found the legislation attractive.”
Fairweather is heading to Turin in late February to do a post-Olympics seminar at Canada House pitching European multinationals on B.C.’s International Financial Activity Act, which gives a 100-per-cent tax break on provincial corporate income taxes for certain activities.
Companies that have specialists employed in operations qualifying under the act are also eligible for a 75-per-cent refund of provincial personal income tax.
The act covers financial, administrative, and support activities, including international film distribution and most recently it was expanded to include revenue from intellectual property earned outside the country.
BASF, which employs 10,000 people in North America and 82,000 worldwide, tallied North American sales of $11 billion in 2004 and more than $50 billion in global sales. The company’s North American financial centre is based in New Jersey and some of those operations are being moved to New Westminster with a promise of expansion to follow.
“They have a fairly large financial operation in New Jersey and this operation as far as I understand it will replace some of the functions they are carrying out in New Jersey,” said Fairweather. “They can get skilled people here and they can get the advantage of the tax break.”
In a release announcing the company’s entrance into B.C., Robin Rotenberg, president of BASF Canada, said it is part of the company’s growth in North America.
“Establishing a finance subsidiary in British Columbia will provide a significant advantage for BASF, and is an important contribution to our growth in North America,” he said. “We believe this will have a positive impact on the company’s performance without sacrificing quality of service.”
Fairweather said while the opening of the BASF operations here only means a few jobs initially, that number is expected to grow.
© The Vancouver Sun 2006