Burger
King to save millions in U.S. taxes in 'inversion':
study
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[December 11, 2014]
By Kevin Drawbaugh
WASHINGTON (Reuters) - Fast food chain
Burger King will avoid hundreds of millions of dollars in U.S. taxes if,
as planned, it completes its pending buyout of Canadian
coffee-and-doughnuts chain Tim Hortons, a tax activist group said on
Thursday.
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In one of the most notable of several corporate tax "inversion"
deals this year, Florida-based Burger King announced in late August
it would buy Tim Hortons and put the headquarters of the combined
company in Canada.
U.S. companies doing inversions - which involve buying a foreign
company and assuming its tax nationality to cut overall tax costs -
have been blasted as tax dodgers by Democrats and liberal groups.
President Barack Obama has criticized a "herd mentality" by
companies seeking deals to escape U.S. taxes.
In a report that Burger King described as "flawed," Americans for
Tax Fairness, a group often critical of corporations over taxes,
said the fast-food chain's inversion "creates substantial tax
avoidance opportunities."
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For instance, it said, by placing its headquarters in Canada so it
is no longer a U.S. company for tax purposes, Burger King could
avoid $117 million in U.S. taxes by never having to pay corporate
income tax on foreign profits it holds offshore.
The group said Burger King's future foreign profits would no longer
be subject to U.S. income taxes. That could save the company about
$275 million from 2015 to 2018, based on a range of Wall Street
earnings projections, it said.
Burger King said in a statement: “The analysis in the report is
materially flawed and the figures do not accurately represent our
facts and circumstances. As we’ve said all along, this transaction
is driven by growth, not tax rates. Going forward, we do not expect
our tax rate to change materially.”
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A company spokesman declined to respond point-by-point to the
report. The spokesman said the Burger King-Tim Hortons transaction
will be completed on Friday.
Tim Hortons said on Tuesday its shareholders approved the deal, with
the combined company to be called Restaurant Brands International.
The company did not immediately respond to a request for comment on
the report.
The report said Burger King is a top food supplier to the U.S. armed
forces and its "decision to become a Canadian company will mean that
while U.S. military families support Burger King by buying its food,
Burger King will no longer support service members by paying its
fair share of taxes."
(Additional reporting by Solarina Ho in Toronto; Editing by Will
Dunham and Cynthia Osterman)
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