Prem Sikka: Burger King deal brews up a whopping tax problem

[LuckyTheDog]

The US$11 billion merger of Burger King and Canadian coffee and doughnuts chain Tim Hortons is the latest example of a tax inversion move. The deal will see BK transfer its company headquarters from the US to Canada and is clearly not driven just by a quest for control of the markets, but also by tax considerations.

The headline corporation tax rate for the US is 35 percent – though after numerous allowances and deductions, the effective average rate of tax is around 12.6 percent. The headline Canadian rate is around 26 percent. Some might see scope for tax savings here depending on the effective tax rate of the companies concerned, but that is not the whole story.

Playing the inversion game
The US Treasury has identified “earnings stripping” as a key motive for corporate inversions. Here are a couple of examples. Companies can locate intellectual property in subsidiaries that are in low/no tax jurisdictions. They then licence other group members to use the same name for royalty payments. The payment is marked as an expense in the country of the paying company. It is tax deductible and so reduces taxable profits.

MORE HERE: http://wonkynewsnerd.com/burger-king-coffee-deal-brews-whopping-great-tax-avoidance-problem/

[Sherman A1]

1. I would boycott BK over this issue, but

I have stopped going there as I find their food quality to have declined significantly.

[onethatcares]

2. write them

or call the headquarters let them know exactly how you feel .

it's the only thing we as citizens can do.

Isn't it strange that they'd want to move the HQ to a country that has universal healthcare?

[Trajan]

3. Like Sherman, I cannot boycott Burger King ....

I stopped eating there a decade ago ....

I could not believe them pulling out a 'char-broiled' hamburger from the microwave ... screw that ... I told then then and there it was my last visit ...

Screw these tax traitors ... go to hell ...

[Shadowflash]

4. I haven't eaten there in years

so I can't boycott, either.

Though, in the last few years, of the 5 BKs we have here two have gone out of business. One was just off campus of a local college. How does a fast food joint near a college go out of business? It must have been REALLY bad.