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Tax Inversion Trend: Burger King & Tim Hortons

Tax Inversion Trend: Burger King & Tim Hortons

Tax inversion has been in the news a lot lately, first Walgreens and now Burger King. The big question is should business do this or not?

Tax inversion is when companies move their corporate offices overseas to reduce its tax burden. Some people call it unpatriotic while others call it a smart move. Since January 2013, 19 companies have announced plans to reincorporate overseas for tax purposes – 14 of them having done so this year alone, according to the Wall Street Journal. Overall, 76 companies have inverted since 1983, according to the Congressional Research Service. 

It's a broader issue than just Walgreens and Burger King. In May, the Stop Corporate Inversions Act of 2014 was introduced to legislation to tighten rules on inversions, saving nearly $20 billion over 10 years, according to an estimate from the Joint Committee on Taxation.

What's your take on this issue? 

Like stated above, the latest news involving tax inversion is Burger King's deal with Tim Hortons. Burger King is in talks with Warren Buffet to help buy Canada's popular coffee brand. According to Bloomberg, Warren Buffett’s Berkshire Hathaway Inc. is providing $3 billion of financing for Burger King Worldwide Inc.’s planned takeover of Tim Hortons Inc., and will earn 9 percent annual interest on the investment. The deal, when done, will cost Burger King $11.4 Billion, but will make it the third-largest fast-food company.

What are other examples you can think of?

A great article to read is: In Burger King-Tim Hortons Deal, Consumer Reaction Could Be Crucial, NYTimes by Victor Fleischer.

To read the Tim Hortons and Burger King Investor Presentation, go here.

 


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