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Oddly the article doesn't seem to explain why this sort of deal makes sense: 1) Overseas cash for a U.S. corporation isn't taxed unless it's brought into the U
by ipsin 12y ago
Oddly the article doesn't seem to explain why this sort of deal makes sense:
1) Overseas cash for a U.S. corporation isn't taxed unless it's brought into the U.S., so if you have a pile of overseas cash, why not buy something?
2) Moving your headquarters to a country with a lower corporate tax rate can also be good (though I believe Canada has a lower stated corporate tax rate, I'm not sure how its effective corporate tax rate compares to the U.S.)
http://en.wikipedia.org/wiki/Tax_inversion http://en.wikipedia.org/wiki/Tax_inversion
- wclax04 12y agoReduces their tax rate by 14%: https://openfolio.com/insights/117/tax-inversion-deals-continue-burger-king-looks-to-reduce-tax-rate-14-by-moving-to-canada/ https://openfolio.com/insights/117/tax-inversion-deals-conti...
- Thaxll 12y agoCorporate taxes in the states : 40%, in Canada : 25%
- masmullin 12y agoYou're forgetting provincial taxes. Check out the KPMG report which shows that Canadian Corporate Tax rates are generally 38%. There are some loopholes to lower that rate http://www.kpmg.com/ca/en/issuesandinsights/articlespublications/pages/taxrates.aspx http://www.kpmg.com/ca/en/issuesandinsights/articlespublicat...
- tixocloud 12y agoCanada has a Effective Corporate Income Tax Rate of 7.2% while the United States is 28.5% though it looks like it varies from sector to sector. Source: Appendix A (pg. 22) http://www.kpmg.com/Ca/en/services/Tax/Focus-on-Tax/Documents/kpmg-focus-on-tax-2014-en.pdf http://www.kpmg.com/Ca/en/services/Tax/Focus-on-Tax/Document...
- waterside81 12y agoThat seems to be only Federal rate - you have to pay corporate tax to the province as well. Tim's is based in Ontario, so they'll likely be paying closer to 25% once all is said & done.
- deleted 12y ago[deleted]
- FD3SA 12y agoA fascinating document, thank you for the link. As a Canadian, I'm quite disturbed by these numbers, since the "trickle-down" theory that these tax rates are based on have been proven false by Thomas Piketty's work. Ironically, McDonald's and a few other large corporations have recently been in the spotlight for hiring Temporary Foreign Workers (TFW) in urban areas with very high unemployment rates. The Canadian tax payer is beginning to understand that giving corporations a free pass to make outsize profits doesn't help them in the slightest. Canadian income tax is comparable to NY state, but apparently our oligarchs get a free pass (7.2% effective income tax!). Truly absurd.
- booruguru 12y agoYou're forgetting provincial taxes. They were talking about this last night on <strike>The Lang and O'Leary Exchange</strike> The Exchange. Evidently, after considering all levels of government taxation, Burger King is only going to save around 1% tax.