On Wednesday, non-partisan public policy institute The Canadian Shield Institute published a policy paper titled “Canadian Dupes: A Better Definition for Real Canadian Companies.” With the Institute’s permission, an edited excerpt from that paper appears below.
“We will be our own best customer,” Prime Minister Mark Carney declared in November 2025, when he announced plans to implement a Buy Canadian Policy as part of the federal budget. But how do you define a Canadian company?
Canada already has a heap of different definitions, and in the past year the government introduced two new policies that each include their own definition of a Canadian company.
“Only a few years ago, the idea of implementing a national Buy Canadian policy was seen as distasteful and parochial. Today, it seems like a natural response to rising trade tensions.”
However, these new procurement policies are among the weakest in terms of defining a Canadian company. The Buy Canadian Policy primarily concerns itself with Canadian supplier materials and whether a company is incorporated in Canada and paying taxes here. By this definition, Walmart Canada or Microsoft Canada would count as Canadian. The Defence Investment Agency relies on the Strategic Partnership Framework definition, which is 161 words long and broadly defines a Canadian company as any company operating in Canada.
The situation is a bit of a mess.
The solution is actually quite simple: For the purposes of public funding, procurement, and strategic industrial policy, the cleanest way to define a Canadian company is simply to start by defining what is clearly not a Canadian company.
We suggest a simple definition: A Canadian company is a Canadian-headquartered firm that is not majority-controlled by a foreign parent or foreign government.
The problem
Inevitably, any time we’re trying to establish a definition of which companies count as authentically Canadian, the government is engaging in a policy project motivated by some kind of economic nationalism.
The economic strategy of Canada’s governments over the past 50 years or more has generally been to prioritize trade, foreign investment, and economic integration. The Buy Canadian Policy, for example, gives a company’s bid a 10-percent discount if it is incorporated in Canada with business operations here—but, of course, that includes local subsidiaries of foreign multinationals.
What we see in this is a policy aiming to encourage as much economic activity as possible without imposing a binary “Canadian vs. foreign” distinction. This light-touch approach may have been fine for the 20th century, but it does not address the most important aspect of the 21st-century economy.
Consulting firm Ocean Tomo estimates that 92 percent of the value of the S&P 500 was derived from intangible assets in 2025, whereas in 1975, only 17 percent of the value of the S&P 500 came from intangibles. These intangible assets move frictionlessly across borders. Patented innovations developed through research and development in one place can be commercialized globally. Wealth creation in the digital economy comes more from ownership and rents that are extracted from intangible assets.
Canada’s fixation on jobs as a primary qualifier for Canadian-ness misses the real engine of economic growth in the 21st century. This decades-long trend has only been supercharged by the recent explosion of AI.
Canada’s light-touch approach is also rooted in a geopolitical time when deeper integration with global supply chains was seen as reciprocal and positive. Put simply: The old definitions are rooted in an economy that no longer exists, and Canada urgently needs a different approach.
The solution
We initially sought to develop some kind of “gold standard” definition for what makes an authentically Canadian firm. Ultimately, there are good arguments to be made that an expansive definition of a Canadian firm should account for multiple factors:
- ownership;
- control;
- headquarters; and
- intellectual property and intangible assets.
Each of these factors captures something real about where value resides. But taken together they create a definition that is harder to administer, easier to contest, and more vulnerable to edge cases. A company can maintain a substantive headquarters in Canada while still being ultimately directed from elsewhere; It can hold important intellectual property here while remaining accountable to a foreign parent.
On the other hand, a Canadian company may take on foreign capital without ceasing to be meaningfully Canadian in every practical sense. In fact, the majority of a venture-backed company’s equity may be owned by foreign investors, but if none of those investors is the majority owner, the company is still functionally Canadian.
That is why we recommend a narrower and more operational rule: foreign subsidiaries should not be treated as “Canadian” firms for preferential access to procurement, public funding, or industrial support when the policy goal is to scale homegrown firms.
A Canadian company is a Canadian-headquartered firm that is not majority-controlled by a foreign parent or foreign government. Paying taxes here should not be enough to establish that a firm should receive preferential treatment intended to build Canadian capacity.
How Canada can implement a fix
Over time, the federal and provincial governments should exclude Canadian subsidiaries of foreign multinationals in all areas of law and policy where we have an existing definition of a Canadian company.
There are some immediate priority areas that the government can get to work on right away. The clearest place to elevate the bar for a Canadian firm is the Defence Industrial Strategy. This strategy is explicitly focused on strengthening Canada; moreover, Canada’s trade agreements have specific carve-outs for national security matters. The same logic should extend to the Buy Canadian procurement policy. When firms are assessed for Canadian-ness, we should not rely only on address and incorporation.
“When firms are assessed for Canadian-ness, we should not rely only on address and incorporation.”
The same definition should govern access to major business supports and economic development tools. Programs explicitly meant to build Canadian capacity should be designed to ensure that public money doesn’t unintentionally subsidize branch plant activity or help foreign parents capture Canadian talent, IP, or tax-supported commercialization. That same principle is especially relevant for innovation supports such as the Scientific Research and Experimental Development (SR&ED) tax credit.
The provinces and territories should mirror this approach. A common operating definition would ensure firms do not face one test federally and another test provincially.
The world is rapidly changing, and Canada’s national economic and geopolitical strategies need to adjust. Only a few years ago, the idea of implementing a national “Buy Canadian” policy was seen as distasteful and parochial. Today, it seems like a natural response to rising trade tensions. In the realm of digital sovereignty, we are more vividly aware than ever before of the importance of engaging strategically in global trade.
Our proposed standard will not resolve every edge case. But it would end the more serious error Canada makes today: treating foreign subsidiaries as domestic firms for the purposes of building Canadian capacity. If Buy Canadian is meant to mean anything, it has to start there.
The opinions and analysis expressed in the above article are those of its author, and do not necessarily reflect the position of BetaKit or its editorial staff. It has been edited for clarity, length, and style.
Feature image courtesy Unsplash. Photo by Harry Spink.