Attracting global tech talent

Immigration and tax lawyers say Canada is set to remain an attractive location no matter how it weathers the COVID-19 storm.

Attracting talent to the technology sector in Canada — like so much else these days — can in part be seen through the prism of pre- and post-COVID-19. In fact, says one immigration lawyer, there are three distinct periods: the pre-, the post- and the “right now.”

“Tech companies are in a good position now to not only weather the storm but to thrive in it,” says Chantal Arsenault, a partner at Norton Rose Fulbright LLP in Montreal. “Certainly, the technology and the need for all kinds of technology is heightened by this situation right now.”

Immigration and tax lawyers agree there will be upsides and downsides for tech companies looking to attract talent in today’s environment.

“Clearly, there are going to be winners and losers out of this,” says Marina Sedai, an immigration lawyer at Sedai Law Office in Vancouver. A number of tech CEOs based in Ontario wrote an open letter to that government asking for help, she notes, “but here we are, working from home. Most of us have started using software and technology that we didn’t have or know about before. Those services and software, I can anticipate that they will survive this period or thrive in it.”

And, although COVID-19 has created economic uncertainty, “our immigration system is done online, and we’ve allowed it to continue” to process applications, says Evan Green, a partner at immigration law firm Green and Spiegel LLP in Toronto. Those with work permits are still allowed to enter the country, he notes, and “most of our [government] programs acknowledge we have a shortage of IT workers.”

Canada’s Global Skills Strategy program was developed to facilitate Canadian businesses attracting foreign talent, either to train Canadian workers or to work with employers to plan job-creating investments in Canada. Its Global Talent Stream provides IT and other “innovative” companies in Canada with an expedited process to hire highly skilled foreign talent. It is intended for firms in Canada that need to fill in-demand highly skilled positions on the Global Talent Occupations List. Introduced in 2017 as a pilot project, the Global Talent Stream focuses on specialized IT workers.

The program makes it easier for Canadian companies to recruit anywhere in the world, says Arsenault, because obtaining work permits is facilitated for qualified foreign IT workers. Companies don’t have to demonstrate a labour shortage, she says, but they must still apply for a Labour Market Impact Assessment. A positive LMIA from the government will show that there is a need for a foreign worker to fill the job and that no Canadian worker or permanent resident is available to do the job. Once an employer receives the LMIA, the worker may apply for a work permit.

Under the Global Talent Stream, this entire process is accelerated, she adds, so that employers do not need to wait nearly as long for workers to get permits as would normally be the case. “And that has been a great success story,” she says.

As of March 26, Canada is continuing to allow workers under the Temporary Foreign Worker Program to travel in Canada, although employers and workers alike are expected to follow the latest public health and safety requirements and guidance from the federal government and provincial, territorial and local authorities to help prevent the introduction and spread of COVID-19. New measures designed to improve flexibility and reduce employers’ administrative burden have also been introduced.

However, says Sedai, “At the moment, there’s a huge problem in getting [foreign] workers into Canada.” Pre-COVID-19, if they were already residents in Canada, with work permits, the government would likely facilitate extensions. However, if those workers are currently outside of Canada, with just an approval letter for a work permit, she says, “On the one hand, they’re legally allowed to come to Canada, provided they don’t show [COVID-19] symptoms, but there are some restrictions that are still being worked out.”

For workers deemed essential, “do they need a consular letter in addition to their work permit approval? Or is their work permit in process? And to complete the process, they need biometrics [done] as well as a medical done, and, of course, the places that do those have largely closed down. So, they can’t take the necessary steps to complete their application to get the approval and then to come to Canada.”

Another potential pitfall is that the Global Skills Strategy, the program used predominantly to attract foreign talent, is based on an acknowledged shortage of skilled IT workers, says Green. “Normally, you have to test the labour market so that you can find a Canadian to do the job.” But if fewer Canadians are working due to layoffs caused by COVID-19, they may be available to take those jobs, meaning less immigration.

The individual income tax rate in Canada is also a deterrent, says François Auger, a tax lawyer and partner at Blake Cassels & Graydon LLP in Montreal.

“We pay too much tax in Canada to start with,” Auger says. That’s a challenge in attracting foreign talent to Canada, whose main competitor is the United States, a country with tax rates that are on average about 10 points lower than in Canada, he says.

“So, when the international talent needs to decide between Canada and the U.S.,” he says, that 10-point difference is “a substantial amount that will be weighed into the decision as to where to relocate.”

On the other hand, says Auger, “On the corporate tax front, our tax system is very generous and compares very well with other countries. Our R&D programs are very robust and generous compared to all our OECD partners.

“In Quebec, a well-structured company that is carrying on research and development can get a refund of up to 60 per cent of any salary paid to employees to carry out the activities,” he adds. “So, for every dollar spent, you get a cheque back of up to 60 cents on every dollar of salary paid to these employees. That makes the research in Canada very affordable compared to other countries.”

The regime is also more generous for a Canadian-controlled private corporation. “If you’re biotech, green tech or fintech, a private corporation will be allowed a very generous tax treatment compared to other countries.”

Quebec also offers a “tax holiday” for an international expert or researcher moving to Quebec, for up to five years, he says. For the first two years, they pay no provincial tax, after which it progressively scales up.

It’s also typical for companies to offer incentives to attract talent. And where immigration is concerned, companies will assist future employees not only through helping them obtain a temporary work permit but to get permanent residency as well as housing and private schooling for their children, says Arsenault.

“I find that when I look at my IT companies, small and big, they understand the need to secure their workforce like that,” she says. “You see the packages [to make] the move as seamless as possible; that is something we see more and more.”

Much of Canada’s competition for global IT talent comes from the United States and United Kingdom, but much comes from India as well now. “They’re very well versed in IT and talented,” adds Arsenault. In the U.S., it’s increasingly difficult for foreign workers to realize long-term options, where permanent residence isn’t available for 12 years, she says. The current U.S. administration has also restricted immigration from many majority-Muslim countries, including Iran, whose labour force includes a substantial number of IT workers. “That’s been our gain” in Canada, she says.

Indeed, U.S. President Donald Trump’s policies, and Canada’s own programs to bring IT workers here, has “resulted in the exponential growth of the industry in this country,” says Green. Toronto, Montreal and Waterloo are all IT hubs, and “Toronto is the leading hub in the world for AI,” he says. “There were more AI jobs created in Toronto than in Seattle, Los Angeles, San Francisco and Chicago combined in the last three years. It is the world leader in the AI industry.”

Canada’s Global Skills Strategy program deserves much of the credit for that, Green says. “I think the government is to be commended for being at the forefront here, because it’s been so beneficial for the country, and the growth in the [AI] industry is just tremendous.”

For Arsenault, the “post” of COVID-19 may also lie in the creativity and passion of Canadian technology companies.

“Probably one of my favourite parts of my job is when I get to visit the IT companies, particularly startups and young companies, where you see the way they manage their [office] space,” she says. “It is always so creative and so different,” and it includes flexibility around working remotely and hours worked.

“That seems more common now, but they’re the companies that broke ground with that,” Arsenault says. “I have a really wide range of clients, from the little startup to the multinationals, and . . . I still very much enjoy working with startups, because they think outside the box.”