On October 3, 2024, Immigration, Refugees, and Citizenship Canada (IRCC) updated its Program Delivery Instructions (PDIs), providing new guidance on how immigration officers should review and assess work permit applications under the Intra-Company Transfer (ICT) category.1
WHY THIS MATTERS
Under the International Mobility Program, employers can use the ICT work permit category to obtain work permits for foreign nationals that are currently employed at their foreign branch(es). The ICT category does not require employers to obtain a Labour Market Impact Assessment. This makes the process simpler for employers and results in a faster acquisition of said work permits; however, stronger evidentiary support is now required for ICT applications that must be factored in.
The recent updates to the ICT work permit category align with Canada’s broader goal to revisit and scale back temporary residence programs in Canada. These changes follow Canada’s recent announcements, which include additional eligibility criteria for Post-Graduation Work Permit applicants, restrictions for international students, as well as restrictions on the Low Wage stream of the Temporary Foreign Worker Program.2
The updated guidance on the ICT work permit category sets out revised requirements for businesses and foreign workers seeking to obtain a work permit under this category.
Background
The legislative basis for the ICT work permit category is found under section 204(a) and section 205(a) of the Immigration and Refugee Protection Regulations (IRPR).
Section 204(a) applies where Canada is party to an international free trade agreement (FTA) with another country, which includes an intra-company transfer provision (for example, the Canada United States Mexico Agreement or the Canada-European Union: Comprehensive Economic and Trade Agreement).
Section 205(a) applies to all foreign nationals who meet the ICT criteria, provided that their transfer to Canada will create or maintain significant social, cultural, or economic benefits or opportunities for Canadian citizens or permanent residents. Specifically, section 205(a) applies to the General Agreement on Trade in Services (GATS).
While the recent changes included revisions to the ICT criteria under both sections of the IRPR, the changes do not apply equally to both sections.
Key Changes for All ICT Applications
Wages
Applicants who are specialized knowledge workers and receiving an ICT work permit under section 205(a) of the IRPR must receive a salary that meets the prevailing wage requirements. Under section 204(a), while receiving prevailing wage has never been mandatory, officers were instructed to take wage into account when reviewing specialized knowledge workers’ applications as it is an important indicator of an individual’s specialized knowledge.
Under the new guidance, IRCC has revised the language to apply for all types of ICT applications (i.e., specialized knowledge workers, senior managers, and executives). Officers have been instructed to confirm that wages are reasonable for the occupation a foreign national is assuming in Canada.
KPMG INSIGHTS
As such, KPMG expects that officers may look more closely at wages when reviewing all ICT work permits.
Specialized Knowledge and Managerial Capacity
The updated guidance notes that applicants should have at least two years of experience with a foreign enterprise to qualify for an ICT work permit. If they hold less than two years of experience, a particularly strong case must be made as to how they possess both advanced proprietary knowledge and advanced expertise that can be utilized in Canada.
In addition, individuals who are in positions that are more accurately defined as lower-level management, or persons with managerial sounding titles only, will not qualify for ICT work permits. IRCC has also noted that the organizational structure or size of the Canadian business must have a reasonable need for an executive or manager.
KPMG INSIGHTS
The size of a Canadian enterprise will be an important factor in determining whether an executive or high-level managerial function is required and justified for the Canadian enterprise. This change applies to both FTA and non-FTA ICT applications.
Key Changes for Non-FTA Countries – GATS
Multinational Corporation
Foreign enterprises applying for an ICT work permit under section 205(a) of IRPR must now qualify as an existing multinational corporation (MNC). This means that the enterprise must have revenue-generating operations in at least two countries outside of Canada. The Canadian and foreign enterprises must have a parent, branch, subsidiary, or affiliate business relationship between them. The qualifying relationship will be determined by examining the ownership and control of each entity. Business relationships between suppliers or clients; those based on contracts, licensing arrangements or franchise agreements; or ownership of a small amount of stock, membership in board of directors, or similar arrangements would not qualify for an ICT work permit.
KPMG INSIGHTS
An enterprise outside of Canada cannot become an MNC by using the ICT work permit category to establish its first foreign enterprise in Canada. Furthermore, a Canadian enterprise that exists in name only and does not generate sustainable revenue and profit, or other benefits from business activities such as selling products or providing a service and/or has no employees or commercial premises, would also not qualify to sponsor an ICT work permit.
Location of Work and Remote Work
The updated guidance for applications for non-FTA countries notes that ICT work permit holders must work at the physical commercial premises where business operations are conducted in Canada. Businesses with no physical commercial premises (i.e., businesses operating from non-commercial/residential locations, co-shared premises, virtual businesses using a mailing address in commercial locations) will not qualify for ICT work permits. In the case of ICT Start-Ups, there may be circumstances where the business location is held in the legal representative’s office until the foreign worker arrives in Canada to establish the business.
IRCC has also emphasized that if the foreign national’s work can be completed remotely, a reasonable explanation of why the foreign national must be in Canada needs to be provided. The time difference between Canada and the foreign national’s location will not be accepted as a justification for the transfer.
For both FTA and non-FTA applications, where an employee has a client-facing assignment, the Canadian enterprise must have the right to order and control the employee for the performance of his/her day-to-day activities. Employees who are transferring to the Canadian enterprise on a temporary basis to work at client sites may received a shorter duration (one year) work permit.
KPMG INSIGHTS
Greater Evidentiary Requirements
There is greater emphasis on providing stronger evidentiary support for ICT applications, including additional documentation regarding MNCs, specialized knowledge, benefit to Canada, and the ability to return home. It is critical to make sure that applications are thoroughly prepared and reviewed to support organizations’ mobility needs.
Considerations for Employers
Employers may be required to provide proof that their organization meets the definition of a MNC.
Employers will need to make sure that their employees transferring to Canada under the ICT specialized knowledge worker category have at least two years of experience. If not, they will need to provide a stronger rationale for the need for the employee in Canada.
Employers may need to review their remote work policies if seeking to transfer employees under the ICT work permit category.
Employers should also be aware of the requirement to maintain a physical commercial presence in Canada. They cannot rely on employees exclusively working at client sites or working remotely from home.
Overall, employers will need to revisit and assess their organization’s compliance with the updated ICT guidance to avoid delays and/or refusals in work permit applications.
Assistance
Individuals who have questions or concerns about the new measures are encouraged to contact their usual immigration counsel or KPMG Law LLP (see the Contacts section) for further guidance.
Contacts
Additional Resources
Footnotes
1 Immigration, Refugees and Citizenship Canada, Manuals Operational instructions and guidelines, "Program Delivery Updates" webpage.
2 See the following issues of GMS Flash Alert: 2024-186 (September 24, 2024) and 2024-102 (May 2, 2024).
Disclaimer
* Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in Canada.
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