Burger King\Tim Hortons Merger and Head Office

[TOareaFan]

funny to hear this considering many Canadian corps and individuals complain about the high corp tax rate of Canada.
yet we have an American corp changing their corp registration from US to Canada ?!?

I don't actually think you hear too many corporations complaining about our corporate tax rate....they do speak up when they read something like this though:

The NDP would pay for future spending commitments by raising corporate income taxes back to the level they were at when the Conservatives took office in 2006, said party leader Tom Mulcair.

“There is no talk or thought of going beyond what the Conservatives had when they came into power, so that gives you an order of magnitude,” Mr. Mulcair said in an interview.

The Conservatives have steadily reduced the federal corporate rate to 15% from 22% in 2006.

http://news.nationalpost.com/2013/1...-tax-rate-to-pre-tory-level-tom-mulcair-says/

It should be said, however, that the difference between the effective corporate tax rate in Ontario (26.5%) and the rate that Burger King pays in the US (CBC reports they paid 27.5%) is not that great. Likely the big tax attraction to BK is how Canada treats income earned in other jurisdictions....which is very important for a company like BK operating around the world.

Unlike the US, Canada does not re-tax income earned overseas. So if BK has a UK sub that has after tax earnings in the UK that they send back to the parent via a dividend, that income sees no further tax in Canada....the US does re-tax that foreign income.

 

[Ex-Montreal Girl]

Just financial shuffling. Much ado about nothing for Toronto. Tim's was owned by Wendy's for a while and nothing significantly changed.

Jeez. I was hoping for The Angry Cruller.

 

[taal]

Unlike the US, Canada does not re-tax income earned overseas. So if BK has a UK sub that has after tax earnings in the UK that they send back to the parent via a dividend, that income sees no further tax in Canada....the US does re-tax that foreign income.

I don't think this is quite correct, and it highly depends on the country in question and if there is a tax treaty between the two (for example someone working in the US but still generating Canadian income).

 

[salsa]

I was reading about this online and American posters were pissed that they would try to avoid paying the higher tax rate, even calling for boycotts.

They can blame their corrupt government for the countless loopholes that legally allow these kind of tax evasion schemes.

 

[TOareaFan]

I don't think this is quite correct, and it highly depends on the country in question and if there is a tax treaty between the two (for example someone working in the US but still generating Canadian income).

Careful not to mix personal tax regimes with corporate tax regimes. If a Canadian company has an overseas subsidiary and the income from that overseas sub is taxed where it is earned, when it is sent back to the parent company as a dividend, we do not re-tax it. In America they do.

 

[Videodrome]

I never thought that "socialist" Canada (as I see it called) would become a tax haven of sorts.

 

[Tewder]

The corp. tax rates - all tax rates i believe - have been lowered under the Harper Conservatives, so it sort of makes sense. Don't worry though, we still pay plenty of other taxes!!

 

[CityPlaceN1]

Ontario taxes have come down as well.

 

[Greg Banks]

Ontario taxes have come down as well.

High rate comparison
Canada 15% Ontario 11.5%
USA 35% Delaware 8.7%

Or from albertacanda.com
USA 32.8% + State 6.2% =39%
Canada 15% + Alberta 10% =25%

Where is it best to have Head Offices?

 

[TOareaFan]

High rate comparison
Canada 15% Ontario 11.5%
USA 35% Delaware 8.7%

Or from albertacanda.com
USA 32.8% + State 6.2% =39%
Canada 15% + Alberta 10% =25%

Where is it best to have Head Offices?

If the decision is based purely on taxes then Alberta I believe has the lowest combined National-provincial/state taxes in North America. There are however, other factors in any decision.

 

[detroitbootybass]

Very few, if any, people or corporations pay the stated tax rates in the US due to copious exemptions. This is especially true for companies with strong industry lobbying groups that carve out even more loopholes for their members.

Here is a 2013 article talking about this subject. The information is still relative as no changes have been made in the US: http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/

"U.S. companies face the highest official corporate tax rate in the world. But there's a big difference between the rates set out by law and the cash that's actually collected.

Large, profitable U.S. corporations paid an average effective federal tax rate of 12.6%..."

 

[salsa]

I stumbled on this video last night called Why Corporate Taxes are Stupid. Just wondering what you guys think.

[video=youtube_share;LxBUPXxiFsk]http://youtu.be/LxBUPXxiFsk[/video]

 

[TOareaFan]

Very few, if any, people or corporations pay the stated tax rates in the US due to copious exemptions. This is especially true for companies with strong industry lobbying groups that carve out even more loopholes for their members.

Here is a 2013 article talking about this subject. The information is still relative as no changes have been made in the US: http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/

"U.S. companies face the highest official corporate tax rate in the world. But there's a big difference between the rates set out by law and the cash that's actually collected.

Large, profitable U.S. corporations paid an average effective federal tax rate of 12.6%..."

In the specific case of Burger King...their "official" combined rate is somewhere in the mid/high 30s% but in reality they pay something like 1% above the combined Ontario/Canada rate. That is why I noted earlier that the real tax savings for BK is elimination of re-taxation of foreign income......BK operates around the world and I bet they are tired of paying tax in country X just to have it re-taxed when sent back to Head Office.....Canada does not do that.

 

[junior43]

I stumbled on this video last night called Why Corporate Taxes are Stupid. Just wondering what you guys think.

I'm not a believer. It would be short term gain for long term pain. Assuming the US did it, more than likely the rest of the G20 countries would follow suit. So now it just boils down to the cost to produce a 'widget'. The US would still lose out to China, since their pay rates are still extremely low. Basically we'd be in the same position as now.

IMO, the US should lower their tax rate to make it competitive. Even better - say 5-10% flat tax on corps, no loopholes, no BS. Cuts down on the accounting for everyone (IRS and Corps)

Best to tough it out until the standard of living in China rises (pay rates) so that making something in China is negligible to making the same product in the US. Then again, the corps would just move on to African countries, and so on, and so on. In a perfect world, once there's no third world countries, it would all balance out - but then you get into gov'ts giving perks to the corp to stay in a country.

Basically, there's no easy solution.

 

[rbt]

Likely the big tax attraction to BK is how Canada treats income earned in other jurisdictions....which is very important for a company like BK operating around the world.

Unlike the US, Canada does not re-tax income earned overseas. So if BK has a UK sub that has after tax earnings in the UK that they send back to the parent via a dividend, that income sees no further tax in Canada....the US does re-tax that foreign income.

Hmm. That implies to me that aside from possibly a couple hundred jobs there is no real benefit to Canada to BK choosing us for their HQ. Would federal/provincial tax revenues actually increase from this BK move? I assume we already tax the Canadian Burger King operations.

One of my employers was HQ'd in Delaware. We kept a single part-time accountant there. The other 250 or so staff were all in Toronto. I'm not sure what Delaware got as a benefit from that relationship but I've been told it was very helpful to my employer.