 Hello everyone and welcome to the webinar, Opportunities for BC Companies in Canada's Domestic Trade Agreements and BC's Venture Capital Tax Credit Program by the BC Government. My name is Ganna Drost, I'm Manager in the Trade Policy and Negotiations Branch, BC Ministry of Jobs, Economic Development and Competitiveness. I'm joined today by Robert Musgrave and Janelle Caring, both Directors in the Trade Policy and Negotiations Branch and David Wallace, Compliance Manager in the Investment Capital Branch. Today you will learn about opportunities for BC businesses in domestic and key international free trade agreements and how tax credit program works. We are running this webinar on the invitation of the Cranbrook Chamber of Commerce and now I pass it over to Helen Baron, Executive Director of the Cranbrook Chamber of Commerce for the welcoming remarks. Yeah, thank you. Hello and welcome everyone. Thank you so much for joining us today. We were very excited to be able to be part of this presentation and we know that we'll be bringing some extremely valuable information to our membership and to those who've joined us from outside our membership. So yeah, thank you all and with that I will hand it back to Ganna. Thank you Helen. So before we get started I'd like to go over a few items so that you know how to participate in today's session. The webinar will last approximately one hour. There will be two presentations, 20 minutes each. You will have the opportunity to submit tax questions to today's presenters by typing your questions into the question pane of the control panel. You may send in your questions at any time during the presentation and we will collect these and address them at the Q&A session at the end of the webinar. You may also wish to explore the handouts in the handout section and you will find there the present today's presentation and also information on tax credit program and Canada's international free trade agreements application in different sectors. Finally you will receive a recording of today's webinar and a survey in the follow-up emails and we will be switching off our cameras for the time of the presentation and we'll turn them back on for the Q&A session. So let's get started. The branch Robert Janow and I work in represents BC's interests in free trade agreements negotiations, trade disputes affecting BC and we also work to increase businesses' awareness of the opportunities in free trade agreements. The things we plan to discuss today will be of interest if you are currently exporting or interested in exporting goods and services to Canadian provinces and to other countries. It also applies to you if you import those goods and services. We know we have a diverse audience today so some of you are at the early stages of your business development or already experienced exporters while others represent community organizations that work with businesses and we hope to make this session relevant to all of you. So today we'll go over a little about our ministry, what free trade agreements do, Canada's domestic and international free trade agreements and what opportunities they offer. We will also show you some useful tools and resources at the end. We understand that FTAs are long complex and technical and we are here to help you to navigate their web. The good thing is that we'll have time for questions later on and in the future if you have questions or concerns you can contact our branch or any offices and resources that will show you at the end of the presentation. So the Ministry of Jobs, Economic Development and Competitiveness aims to make life more affordable for British Columbians by building a strong sustainable economy and improve the standard of living. There are many ways to foster this economic growth. One way is to encourage businesses to leverage the opportunities found in free trade agreements and that's our job today. With that I'd like to kick it off with a short welcome video from the Minister of State for Trade. Hello, I'm George Chao, Minister of State for Trade. I'm pleased to add my support and welcome you to this session. The goal for this session is to share the benefits and opportunity of Canada's domestic and international free trade agreements and to ensure that everyone in BC's diverse regions, communities and sectors receive the information needed. Free trade agreements help open new markets as well as events and protect BC's competitive advantages. They are a critical part of attracting new investment into BC's regions. They apply to all sectors of the economy including forestry, agricultural, intellectual property, clean tech and mining to name just a few. I'm proud to say that last year we held close to 50 information sessions like this one with approximately 1500 participants covering all of BC's regions. We have also held sessions for Indigenous businesses and women-owned businesses. Now because of COVID-19, we are continuing the webinars and my hope is we can resume in-person sessions when the time is right. The COVID-19 pandemic has made international trade much more challenging for the foreseeable future. Thankfully, the very good news is Canada has 14 free trade agreements covering 51 countries including a new Canada, US, Mexico agreement and agreement with the European Union, Japan, Korea and many others that use correctly can help lower your costs and provide much needed certainty in these uncertain towns. Free trade agreements are complex. My staff are here today to help you understand how they work. I want to ensure that you are supported as you plan for the future. We're also offering help with export and trade readiness through our export navigator program and we have in-market experts and other resources available in Canada that you will hear about today. I wish you all a successful info session. Thank you. Let's see what free trade agreements or FTAs do. You may have heard of the World Trade Organization or WTO. The WTO is the foundation of global trade. It sets the rules of trade between nations. FTAs build on the commitments made by countries members at the WTO. Free trade agreement in simple terms is an agreement between two or more countries to facilitate trade and eliminate trade barriers between them. How do free trade agreements do this? A common way to do this is by offering better preferential tariff rates, transparent and non-discriminatory access to a bilateral FTA partner. Some FTAs cover only goods, while others include services, investment, government procurement and other things. FTAs are changing and they are becoming more comprehensive to cover things like SMEs, e-commerce and inclusive trade. It is also important to remember that FTA is a two-way street. We take on the obligations, but our FTA partners take them on as well. FTA also provide a means to sue a trading partner in case of a breach of an agreement. So now I hand it over to Robert to talk about Canada's domestic trade agreements. Thanks, Kenna. Very briefly, we've had an evolution of trade starting in 1995. This came on the heels of the NAFTA negotiations where the criticism was that there was more free trade internationally than there was in Canada. The provinces, territories and the federal government got together and negotiated the agreement on internal trade. It basically allowed for enhancement of trade within Canada that brought us up to the standard that we already had internationally. In 2007, British Columbia and Alberta decided that the agreement on internal trade was not living up to expectations, to put it mildly, and decided to go ahead themselves and negotiate a bilateral approach to free trade. This was a fairly new approach, but I'll get into that in a moment. In 2010, Saskatchewan joined the TELMA. They didn't like the name TELMA, so they said please change the name, so we said sure. It became the US partnership trade agreement. Manitoba joined that in 2016, so essentially it's the same agreement that we've had in place since 2007. 2017, more recently the federal provincial and territorial government got together and decided trade needed updating. This came on the heels of the Canada-European agreement, the CETA, and much like the case in 1995, the jurisdictions of Canada decided that we needed to bring ourselves up to what we currently were doing internationally. Next slide please. First of all, the agreement on internal trade, going back to 1995, aimed to eliminate barriers to trade, investment, and labour mobility within Canada. As I mentioned, it became antiquated and it was widely criticised as not being as open as we could be. The view was that we're in an international world, there's free trade left, right, and centre, and we didn't have it within Canada, so provinces, territories, and the federal government got together and fixed that in 2017. Next slide please. As I mentioned, BC and Alberta were tired of the lack of progress of the AIT, going back to about 2004, and decided to lead the way in Canada. The result of that of the efforts was a groundbreaking agreement, which has been used fairly extensively in our other international trade agreements and other countries have taken a look at this and have actually adopted their own internal trade, so it's had a fairly big impact. What it did was it created Canada's second largest economy, so if you look at the GDP and population of BC and Alberta initially, we were smaller in population than Ontario. We were larger in population than Quebec, and we had a larger GDP than either of them, sorry, than Quebec, but slightly smaller than Ontario itself. It also created what is probably the most open free trade area within North America. Many people tend to look at Canada and say, you know, it's fragmented, it's many, many little populations or many jurisdictions that don't trade with each other. In fairness, if you look, and this isn't justifying those barriers, but in fairness, if you look at the United States or any other federation, you'll find that Canada is looking pretty good. There's far more free trade within Canada in areas like procurement than there is within the United States, for example. The film had created a more open and competitive economy where all good services, workers and investments can move more freely. Importantly, it also developed what is now a national standard for labour mobility, whereby if you are a certified, sorry, if you have an occupation, if you work within a certified occupation, you're a doctor, lawyer, accountant or whatever, you now have full labour mobility within Canada. That wasn't the case before. The Scatron joined the Tilman 2010, as I mentioned, the name was changed, and it's had a fairly important impact on domestic and international agreements. Key provisions of the Tilman Duatta. It is what's known as a negative listing approach. So all economic activities, good services, investments, labour mobility and government procurement are covered unless they're explicitly not covered. So basically all you do is you look at the set of general rules, which I'll outline in a moment, and then you say, well, if there's no exception to these rules, then these rules apply to me. Non-discrimination basically says we treat each other at least as favourably as we treat our own or anybody else's. So you don't have one rule for one rule domestically and another rule for somebody from another jurisdiction. The no obstacles is really a catch-all. So, you know, you can be discriminating or non-discriminating, but you can still actively keep people out of it. These are not non-tariff barriers. So no obstacle feels a lot with trying to ensure that you're not getting around the rules by setting up other obstacles. Transparency, as it says, your laws are published, your rules are published, and any changes to those rules, you notify the other jurisdictions and you get them an opportunity to comment on them. Regulatory reconciliation, all standards and regulations that impact trade investment and labour mobility in the four western provinces are technically reconciled. It is complaint-driven and I'll get to this in a moment under the new CFTA, but in theory at least the regulatory cohesion in the four western provinces is full. Finally, legitimate objectives is kind of a catch-all that says, yeah, you know, you have all these rules, but you've just had a landslide and you have to clear the highway, so you can't open it up to procurement from across the country. You have to go and clear those boulders and save the people that are buried under it right now. So it deals with things like that. So the one off, just the rules, you've got an environmental disaster and you need to also sort of suspend the rules where you have to. Next slide, please. In addition to those general rules, which by the way are pretty consistent with what you see internationally, they're strong. Most international agreements carry very similar kind of rules as we've got here. The difference is that these rules apply right across the board to all economic sectors. So there are some specific rules where the general rules just aren't quite clear enough. So for example, government procurement, it establishes the thresholds above which procurement has to be open. So it's, if it's a $10 purchase of a pencil, it doesn't have to be openly procured. Labor mobility, I mentioned before, it was, it was, it all started in BC and Alberta and is now extended to the rest of Canada, whereby certified workers now have full labor mobility within Canada. Investment covers a number of things, but one of the important ones is that business registration and reporting has been reconciled. So if you're a business in BC and you want to do business in Manitoba or Saskatchewan or Alberta, you check off the box and you don't have to apply separately, meet all of their own requirements, submit the fees, do the end reports, you just have to satisfy your own jurisdictions and you can operate across Western Canada. We're trying to extend that to the rest of Canada as well. No residency or performance requirements, basically, you can't, again, get around the rules by saying, well, you have to produce locally, you have to purchase locally, that sort of thing. So that's also prohibited under the agreement, as it is under the national commitment as well now. Next slide. The agreements, so of course, are backed up as Ganna mentioned earlier by a dispute resolution mechanism. The focus on this mechanism is you try to avoid disputes. In fact, I was involved in this morning, in one this morning, where a company calls, says, hey, this wasn't fair, we're not being treated fairly, you try to resolve it. If you can't resolve it, they do have the right to request an arbitration panel, as does another jurisdiction. An arbitration panel proceeds much like any other arbitration does. It comes out with its findings and the findings that they're called recommendations are binding on the jurisdictions. Next slide, please. On top of the regular dispute resolution mechanism, we also have a big protest mechanism. Initially this started under the New West Partnership, and we've now extended it to all of our trade obligations to both domestic and international. What this does is it allows a business to say, I don't think I'm being treated fairly in this particular procurement. They launch a consultation with a procuring entity. If that fails, if consultations, if you like, fail, they have the right to establish a single arbiter. And they present their case to the arbiter. The procuring entity presents their case. The arbiter adjudicates those cases and his findings, his or her findings and recommendations are final and can issue cost and recruitment awards to cover things like legal acceptance. Next slide, please. Canadian and free trade agreement, as I mentioned earlier, came into effect in 2017, largely influenced by bringing ourselves up to the standards that we are now offering to the Europeans. Having said that, the structure of the CFTA negotiations quickly moved to use the structure that we had under the New West Partnership. That is, it's a negative listing approach the entire agreement is. Everything is covered unless it's specifically excluded with one exception, and that is a positive listing approach to regulatory reconciliation. That's our next slide. I'm sorry, it's about the next slide. It'll come after this one. So the new CFTA basically opens up the Canadian market. It's strong, it strengthens our dispute resolution mechanism, it strengthens procurement, it's more clear rules, it covers all economic sectors, so it looks a lot more like the New West Partnership trade agreement. Next slide, please. One of the important provisions of the regulatory reconciliation and cooperation table came again out of the NOEPTA, where they recognized that we had actually achieved this, something that nobody else had managed to do, but they wanted to know how it worked. Our honest assessment was that while it's there and the obligation is to have everything reconciled, there's no teeth or tools or mechanism to actually get it done. We did a whole bunch of work up front, but we don't really know if we've got everything, and if we do find something, whose rules are out of place, if foreign provinces have different rules, who has to change. So under the CFTA, we set up a regulatory reconciliation. It establishes a process in which all jurisdictions get together and identify and remove any regulatory differences that create barriers to trade across the country. Each jurisdiction has an official who's mandated as their RCT rep. I happen to be the lucky guy for BC, and we're mandated to identify and eliminate existing trade barriers, that's regulatory barriers that prevent new and to prevent new ones from emerging. For you, this is important because stakeholders, businesses, etc., are all encouraged to identify issues if they have issues between regulatory issues in other jurisdictions that are making their business life difficult. They can notify us and we can then sit down with the other jurisdictions and try to fix them. That's it, I believe for the internal trade, so I believe Gannett's back to you, and thanks for listening. Thank you so much, Robert. So now let's move to the international free trade agreements, and this map shows where in the world Canada's free trade agreements have been implemented. These countries are marked in light blue, like the US, European Union, Australia, where free trade negotiations have been concluded, but not yet implemented as trade agreement, for example, Malaysia in dark blue. In purple, you will see the countries that have both in force and not yet ratified free trade agreements with Canada. This is the case of Chile and Peru. So some free trade agreements are bilateral, but others are multilateral, and you will also see that sometimes FTAs overlap. This is also reflected on the map with the striped pattern. For example, Canada is an FTA with Mexico through a Canada-US-Mexico agreement, and also through comprehensive and progressive agreement for a trans-specific partnership. The good news for you is that FTAs do not cancel one another, and you can choose under which FTA you want to claim preferential terms of trade. Canada has a key first mover advantage as the only country to have the agreements with other countries in J7, the US, UK, France, Germany, Italy, and Japan. However, this preference will not last forever, so it is important to get the most out of it now. So now I will briefly cover key Canada's international free trade agreements. I'll start off with the Canada-US-Mexico agreement known as the CUSMA in Canada and the USMCA in the US. So it entered into force on July 1st this year and replaced the 26-year-old NAFTA. The CUSMA largely extends and modernizes NAFTA while protecting its key elements and our preferential access to the US and Mexico. So on this slide, you can see the key elements of the NAFTA that CUSMA retains and also some key changes that it brings to your business. I want to emphasize that these lists are non-exhaustive. So what's been preserved, number one is, of course, the elimination of virtually all tariffs. Then also very important for Canada is NAFTA's dispute settlement mechanism has been preserved, and Canada's temporary entry access to the US and Mexico and vice versa. So what's important for you to know as a business, so to get the preferential tariff treatment, a company needs to come to claim it by proving the origin of its product, and this is true for any free trade agreement. Under the CUSMA, there is no standard certificate of origin, and you will find here an embedded link to the Canada Border Service Agency page that lists the information that this certificate or the replacement of the certificate shall include. In a nutshell, it's a simplified version and lots of information can be provided electronically. So now it's also sometimes not clear how a good should be classified or whether a good satisfies the rules of origin. So if you are looking for this certainty, you may wish to consider applying for an advanced ruling. Advanced ruling is a written statement issued in this case of the experts to the US by the US customs and border patrol, and this statement attests to a product specification that it meets the rules of origin, and the authority must abide by its decision. So if an applicant wishes to obtain a CUSMA origin advanced ruling, they must submit a new application because the NAFTA origin advanced ruling only remains valid for goods imported under the NAFTA. So some other things that are good to know is the de minimis were increased, and de minimis are the thresholds for waiving customs duties and taxes on goods imported by courier. I also wanted to highlight that the current border closure between Canada and the US is not intended to impact essential travel, trade and commerce. Tracking, training and air fright services continue between Canada and US without interruption. So another agreement I wanted to briefly mention is the Canada-European Union Comprehensive Economic and Trade Agreement known as CETA. The European Union is the world's largest single market and largest integrated economy. It is almost the same size of the economy as the US in terms of the GDP, but is more than 25% bigger in terms of population. The CETA has been provisionally enforced since September 2017, but here you should not be confused by the word provisionally, and in fact most of the agreement and mainly provisions that deal with the trade-in in goods and services, and this is about 95% of the agreement, they are in full effect, and CETA will become in force, fully in force once all European members ratified. The customs duties were lowered under the CETA right away, so the tariffs of on 98% of Canada's goods have been eliminated. The United Kingdom left the European Union on January 31st this year, and it is still in the transition period now, and it remains part of this CETA until at least December 31st this year. So now moving to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or the CPTPP, it entered into force at the end of 2018, and is one of Canada's most recent trade agreements. It is a free trade agreement between Canada and other 10 countries in Asia Pacific and Latin America region, and it is currently in force for seven countries that you can see involved on the on this slide, so Canada, Australia, Japan, Mexico, New Zealand, Singapore, and Vietnam. So once fully implemented, 99% of tariff lines among CPTPP parties will be duty free. It is also important to note that this trade area may expand since other partners in the region have expressed interest in joining Thailand, South Korea, and even the United Kingdom. So here is our last slide with the trade support resources and contact details. So our trade policy and negotiations branch is here to support you and help you answer any questions that you might have about trade and trade agreements. We are also interested to hear about any barriers that you encounter in Canadian or international markets, and we will seek to address them and can also advocate with the federal government that they be addressed. You can report a trade barrier directly to us or to the federal government through the online tool. In online resources here, I'll just point it to you. You can use this link and it is embedded there. So this box also has the link to a tariff finder. Canada tariff finder is a handy and fairly user friendly tool for figuring out what sort of tariffs your product will face in a market where Canada has free trade agreements. Next I would like to highlight the trade support services box. You will find here a link to the BC expert navigator program. It offers free support and guidance to help your business grow outside of BC. And I know there are some expert navigators here on the line today, but you can find them quite easily. They have over seven offices in different BC regions. So there is also a link to Canada's trade commissioner service federal entity that helps Canadian companies navigate international markets through a network of trade commissioners offices. BC also has the network of trade and investment representative offices and with offices again in many countries including in the US, in Asia Pacific and in Europe. And finally there is also an investor services branch. It facilitates investments in BC and works closely with the BC companies that are seeking international investment. I will also encourage you to follow us on social media channels to get the latest updates about the events and other information that might be relevant to your business. So that's the end of our presentation and before I pass it over to David, I just wanted to remind you that the presentation materials will be shared with you after the presentation and that you can submit your questions in the question pane of the go-to webinar control panel. Now over to you David. Great, thank you Ganna and good afternoon everyone. Today it's my pleasure to provide you with a summary of the province's venture capital tax credit program which helps BC based small businesses raise investment capital. Today I will outline the details of how the program works, what types of businesses qualify for registration in the program and how tax credit certificates are claimed. Next slide please Ganna. So some of you may be familiar with the concept of venture capital and others not so. If you think of different types of investments such as bonds, treasury bills, GICs, equities or stocks, real estate commodities and so on each has a different level of risk. Venture capital can be characterized as an equity investment or a stock investment that is volatile and high risk. The features that make venture capital businesses high risk are that they are usually early stage startup companies are generally researched focused and many have no tangible assets, no products and no revenue. Investors are attracted to these businesses as with high risk comes the potential for very high returns. Venture capital investors are not looking for a stock price appreciation as you would see in a company listed say on the Toronto Stock Exchange, they are looking for an exit event. So by an exit event I mean investors are looking for their shares to be bought out by a venture capital fund or for the business to mature and the shares be listed on a stock exchange through an initial public offering or the business to be acquired through a merger and acquisition. The investors are looking for a return that is more than 30 times their initial investment. Next slide please. Thank you. The program is to stimulate investment in BC based small businesses through a tax credit. The program provides a 30% tax credit to investors to help offset some of the risk investing in these high risk companies. The tax credit goes to the investor while the business has the advantage of making an investment into their company far more attractive as the investor is getting 30% back on the value of their investment. Not every company is eligible for registration in the program. The tax credit program operates under the legislation of the small business venture capital act which outlines the registration requirements which I will speak to shortly. To register in the program a company must do three things in order for it to have its shares eligible for tax credits. First it must meet the registration requirements as outlined in the legislation. Second once registered it must be issued with an equity authorization. Now this is an authorization issued by the administrator of the program for the business to go out and raise tax credit supported investment. And finally it must issue equity shares for cash. Debt for loans or shares issued for services provided or in lieu are not eligible for tax credits. Next slide please. As I mentioned not every business is eligible to receive the tax credit sorry for registration in the tax credit program. In order for the business to be registered and for the business to receive tax credit support investment it must meet certain criteria. The first criteria is that it must be an incorporated business and be registered to operate and do business in British Columbia. At the time of registration it must be a small business which means it cannot have more than a hundred employees. Once after registration it can grow beyond the hundred employees. It must have 25,000 inequity capital so it must have either raised money in the open market or the founder has input their own money into the business. It must have a permanent place of business in British Columbia and it must pay at least 75 percent of its wages and salaries to employees who report to work in British Columbia. At the time of registration it must pay 75 percent and throughout the life in the program 75 percent of the employees must report to work in BC. At a time of registration 80 percent of the business's assets must be located in BC and this is also applicable to the company's life in the program. Finally a business must be substantially engaged in an eligible business activity or what I call a qualifying activity. This concept is important. It's by substantial engagement we look at at least 50 percent of the business's assets and expenses are applied directly to one or more of the eight qualifying activities that I'll speak to shortly. Next slide please Gam. So this slide outlines the eligible business activities. So the first is manufacturing and processing. The company must create value in the manufacturing process. We apply a value added test to ensure the company is changing the form of the raw material or input into a finished product. Value added is the key. The next activity is the research and development of proprietary technology such as information technology or life sciences. For this particular activity a proprietary ownership or right to the technology is key as this allows the business to direct its research and development and commercially exploit its technology or product. The next is destination tourism which is the operation of a tourist resort tourist service or tourist traction. For this category at least 50 percent of the business's revenues must come from tourists which is defined as customers who are traveling at least from more than 40 kilometers away. And this particular activity is only eligible for businesses outside of the Metro Vancouver Regional District, the Capital Regional District, and the Municipality of the Whistler. The next is interact the development of an interactive digital media product. This would be like a gaming company and the key here is to is to look at interactivity so the user needs to be interacting with the developed product. Next is the development of clean technology and this includes the research and development of technology or the manufacturing of a product that contributes to clean air, land, or water. The next activity was introduced in budget 2019, advanced commercialization. And this is these are companies that are using online digital technology tools to help other businesses scale up, including attracting customers, building their brands, and marketing their products or services. And again, this is only available to businesses located outside of the Metro Vancouver Regional District and the Capital Regional District. The next is community diversification. Again, this is only applicable to businesses outside of Metro Vancouver and the Capital Regional District. And the key here is diversification. To be to be eligible in this particular activity, the business must be diversifying the regional economy. And finally, we get to scale up. And scale up is for businesses that have already been in our program for at least two years and have raised tax credit supported investment. And this allows the business to pivot from say, research and development into a scale up activity where they're building their brand, attracting customers, and marketing their product or service. Next slide, please. So there are some activities that are prohibited by legislation. Quickly, financial services, lending, investments are prohibited. Retail and gift stores are prohibited. Real estate or land development is prohibited. Resource extraction and processing is prohibited. And food services and restaurants and bars are prohibited. Next slide, please. So there are two ways that investor can invest in small businesses. The first, an investor can purchase shares directly from a company that is registered in our program. This we call the direct investment model. And the companies are called eligible business corporations often referred to as the EBC model. Alternatively, there is a indirect investment model where investors purchase shares in a venture fund called a venture capital corporation or VCC. And the venture capital corporation in turns invest the proceeds into one or more eligible small businesses. We call this the VCC model. The VCC model allows investors to spread their risk by investing in multiple companies. Next slide, please. So the graphic to the right illustrates the direct investment or EBC model where the investor purchases shares directly from the company. The investor will purchase common or preferred shares or convertible right directly from the company for cash. An important concept here is the idea of patient capital. The investment horizon is long. This is not a quick turnaround investment. These companies take years to develop their products and bring products to market. So patient capital is very important. The investor must hold their shares for a minimum of five years. And under the EBC model, an EBC can raise up to $10 million lifetime in the program. Next slide, please. So the venture capital corporation model to the right under the VCC model, the investor purchases VCC shares and receives the tax credit. And in turn, the VCC must then invest this money into one or more eligible businesses. Unlike the EBC model, investors who invest in the VCC do not have to hold their shares for five years. However, the equivalent on the five year hold in the EBC program is that the VCC must hold investments in one or more eligible businesses for a period of five years. And again, the concept of patient capital applies here. It takes time for these businesses to develop and grow. And like an EBC that can raise $10 million in equity under the VCC program, a VCC can invest up to $10 million in a single eligible business. Next slide, please. So not everyone is eligible to receive the tax credit. Only individual investors or corporate investors residing in EBC at the time the investment is made are eligible for the credit. Individuals and corporate investors are treated differently from a tax standpoint. Individuals can receive a refundable tax credit while corporations receive a non-refundable tax credit. An individual investor can claim a tax credit of up to $120,000 per year, which means that the investor can invest up to $400,000 per year at a 30% tax credit equals a $120,000 credit they can claim. For corporate investors, there is no limit on the amount of tax credit a corporation can get. However, as the credit is non-refundable, which means it's only applicable to BC taxes payable. For individual and corporate investors, the tax credit can be claimed in the year that the investment is made, then carried forward for four years. Next slide, please. The way an investor gets the tax credit involves a few steps. The first step is that the company, the EBC or the VCC, claims the tax credit on behalf of its investors through our online tax credit system, which is called ETCA, electronic tax credit application system. The company enters the details of the investment such as the name, the SIN number, the amount of investment, the number of shares, and the date of investment. Then we do some due diligence and processing in the background, but the end result is that a PDF tax credit certificate that states the amount of the tax credit and the amount of investment is created in a PDF document that can be emailed or mailed to the investor by the company. The investor will in turn claim the tax credit when they file there. For individuals, the tax credit is refundable, which means if they have no BC taxes owing, they get a refund check from the CRA for 30% of their investment. Next slide, please. So a business registered in the program must comply with the program requirements for five years from the date the business received the last tax credit supporter of investment. For the EBC, this means that investors must hold their shares for five years and that the business must be in one or more of the qualifying activities for a five-year period. For a VCC, it means that it must be invested in one or more small businesses for the five-year period. We ensure compliance through a couple ways. Companies must submit an annual return to the branch, and they do this every year so that we can check on their activities and make sure they're compliant with legislation and that they're spending the tax credit appropriately and not for prohibited purposes. Also, we have independent auditors that we contract out that will audit approximately 20 companies per year, and the outside auditors will look at their GLs and make sure that they're complying with the Small Business Venture Capital Act. Next slide, please. So the program statistics for 2019, pretty similar. Each year we register approximately 100 businesses in the program, and each year generally 200 or more companies raise investment in the program. Last year in 2019, 230 companies raised investment, about $115 million in which the province issued approximately 2,000 tax credit certificates and issued 35 million in tax credits. Next slide, please. So that concludes my presentation for today, and this provides the contact information for the branch. There's our website, email address, and the phone number. We have what we call a person on duty each day of the week, and they're there to take inquiries, answer any questions that you may have, and start the registration process. And thank you for your time today. I'll now pass it back over to Ganna. Thank you so much, David. So now we are going to begin answering the questions that were submitted during today's presentations and also prior to the presentation. As a reminder, you can still submit the questions through the question pane in your attendee control panel, and we'll start with the questions that we have received during the presentation. So the first question will go to Janelle. The question was asked by Bob, and the question reads as follows. Does the eliminated tariff in CETA extends to services as well, or is it only limited to goods? Yeah, thank you for the question, Bob. So tariffs supply to goods only, but certainly CETA is arguably probably the most ambitious and comprehensive free trade agreement that we have. So it certainly does include a lot of obligations and commitments and benefits for services providers. So basically we would need to know exactly what service that you're speaking about, what service your company provides, and what we would do is we would look up in the trade agreement specifically what obligations have been taken, because some of the trade barriers that apply to services are at the member state level or at the country level. So we would need to look at the commitments that have been taken in the country specifically that you were interested in, let's say France. So we would work with you to look up that specific service and what the obligations are on the part of France in this case. There's certain things that we find that are trade barriers for services providers, so it would be things like restrictions on whether or not you had to be a French or whether you had to have the nationality, or perhaps a local presence requirement, maybe you would need to have an office in country, or maybe they have restrictions on the number of services providers that they would allow to provide a certain service in country. So in the case of services, it's not such tariffs that are an issue, but it's these other trade barriers that we try and address in trade agreements, and that we'd be more than happy to look up for you and find out the specifics if you would find that helpful. Thank you. Thank you, Janelle. So we'll go to the questions that we have received prior to the presentation. David, we had a question for you from Tim. So the question is the following. Is federally incorporated business but registered and running their business in VC, eligible for the tax credit program? Yes, they are. So a business can either be federally or provincially incorporated but they must be registered to do business in VC. So yes, they would be. Thank you. And another question to you. Again, is the company engaged in distribution of medical devices? Is it eligible? Distribution would not be an eligible activity. If the company is manufacturing the medical devices and distributing them, then they may be. Again, we would go back to the value added test to see what they were doing. If they have multiple inputs and they're adding value to the process, they may be eligible, but just straight distribution of a product sourced overseas would not be an eligible activity under the legislation. Thank you. I think we have a follow-up question from Bob regarding the services under the CETA. So he wants to clarify that the question was specific to cyber security and he would like to know the best contact to reach out to get clarity on the on the telephone services questions. So Bob, I suggest you to get in touch with us either with Janelle or myself after the webinar and we'll be happy to follow up with you on that. So other questions that we have received prior to the webinar related to the internal trade. So Robert, that would be the question to you. So under a new West Partnership Trade Agreement, is extra provincial registration not required if a VC business expands its physical presence to Alberta, Manitoba and Saskatchewan? Technically, it's required, but the thing is that we have used electronics to avoid you actually doing it. So if you are a VC company and you're wanting to operate in another NUEPTA party, you just, you can do so, but you have to identify yourself as being a company that's going to do that. So for those of you, well, everybody here probably has a business and it's registered. So you have a company that's registered in British Columbia and you decide that you want to now start working in Alberta. In the old days, you used to have to go to Alberta, you'd go to the corporate registry, you'd make all your applications, you fill in all of the forms, you pay all your fees and then you do your annual reports, plus you do all of your, your any changes to the boards of directors, for example, or your address, you would have to submit those and pay your fees to each jurisdiction that you were operating in. Now all you have to do is satisfy the requirements of your own jurisdiction. So if you're a British Columbia company, you just need to meet British Columbia's requirements and check off the box that you're operating also in these other provinces and they are all notified electronically by British Columbia. You don't need to do anything and you don't need to pay anything to those other jurisdictions. Thank you, Robert. And I think we have one, actually a couple of questions more. So David, one more question to you on tax credit program. So is the software development, is it included in research and development? Yes, it would be. So again, that would be included under the research and development and proprietary technology and we would look for that proprietary right or the ownership right that the business would be able to direct its research and development and commercially exploit its products or finished product. Yeah. Thank you. And Janelle, I think we have one more question to you. So about the products and duty-free treatment. So how do I make sure that my products receive duty-free treatment in foreign markets when it is available? Yeah. Thank you for that. We've received a number of complaints from companies who are encountering some confusion out there. And so I think it's really good to pass along this information of what other companies have been experiencing. And I think what we've noticed is in some cases, because we've had NAFTA for a long time and then in Canada, we got new trade agreements, the Canada EU trade agreement, the CPTPP fairly recently. What we're seeing is that a lot of the brokers, careers, customs authorities, maybe you're not as familiar with those trade agreements. And so we've seen some errors in terms of duties being charged when they shouldn't have been. So I think it's very important for companies to be informed on what the specific requirements are. And Ghani, you covered them in your presentation where you talked about completing, making sure that your product meets a rule of origin, completing the certificate of origin, asking perhaps for an advanced ruling from the customs authority where your goods are being imported to. I think doing all of that work is very important and ensuring that you indicate on your invoice the information that is needed to demonstrate that your product is in fact Canadian and that it meets the preferential terms to be considered to be duty-free. It's the importing country of the customs authority of the importing country who makes that determination. So if I'm exporting my product to Japan, it would be the Japanese customs authority that determines the duty rate. But if you make sure that your invoice indicates clearly on it that it meets the rules and that it should provide preferential tariff treatment, and the language on that is specifically in the trade agreements. So you can ensure that you've put that caveat on your invoice. All of that work should make it easier for the customs authority to make the, I guess I would say, the right determination. But still mistakes can happen and we've seen a few. And as I say, most of them seem to be not so much NAFTA as they are these other trade agreements. So in that case, if you believe you should have been receiving duty-free treatment and then you did not, you still have recourse. You have up to three years to bring that to the attention of the customs authority and have that be reversed. And we would be also happy to help with that in terms of, you know, looking at it and clarifying that in fact we do believe that you're good meets the rule and should have been duty-free. And we'll work with the Canadian Trade Commissioner's Service on that as well to clarify that. And so there are things you can do, but we have noticed that there have been some errors in doing that. And as Ghana had mentioned, you need to claim the preferential treatment. It's not automatic. And with these trade agreements, with the Canada EU trade agreement, NAFTA, most of them, most products will be duty-free. So you should expect to get duty-free treatment for many, many things. And so that's why we're here to make sure that you have that piece of information and you feel your products aren't being treated as you would expect. Let us know and we'll see what we can do. Thank you. Thank you, Janelle. So I think we have no more questions left. So with this, I would like to thank you, Helen, Janelle, David and Robert. And thank you everyone for attending today's webinar, Opportunities for BC Companies in Canada's Domestic Trade Agreements and BC's Venture Capital Tax Credit Program. And if you have any other questions, please contact us at our contact details found in this presentation. And you will also receive a follow-up email with a link to view a recording of today's webinar and also with PDF presentations and handouts. And you will also receive a link to fill in the survey. And we would appreciate if you can complete that and provide your feedback. So on behalf of BC Government, the Cranbrook Chamber of Commerce and our presenters, thank you for joining us today and have a great rest of your day. Thank you.