Burger King and Tim Hortons, a marriage made in tax heaven

[steven]

When Buffalo attorney Randall Andreozzi worked for the Internal Revenue Service in the late 1990s and early 2000s, it was somewhat common to see inversion transaction activity by U.S. shareholders looking to relieve themselves of some of their operating tax burden.

The United States is unique in that it taxes corporations on worldwide income, applying a second layer of tax on foreign money. He said that for years there has been an incentive for businesses to form a company in a foreign land as a tax haven. Years ago, it often was in an offshore place such as the Cayman Islands or Bermuda. The companies would then be subject to rules of foreign entities doing business in the States and only face U.S. taxation for the income made inside its borders, said Andreozzi, a partner at Andreozzi Bluestein Weber Brown LLP.

After some fuming by the IRS, in 2004 Congress tightened the rules under the American Jobs Creation Act, he said. Inversions were still allowed, but the law made it more difficult for a business to qualify for out-of-country status. Congress made it so that companies making this attempt for tax breaks had to have “real” business in these foreign countries to qualify, he added.
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To this day, inversions remain a maneuver used by U.S. companies, even as the patrolling of such activity got stricter and government officials look for further means to quell them.

Most recently, Burger King filed plans to form a new parent company in a Canadian vince as part of an $11 billion acquisition of Oakville, Ont.-based Tim Hortons restaurants.

The advantage to the proposed move is that multinational corporations with a home base in Canada do not have to pay tax on earnings from most foreign subsidiaries. The same cannot be said for U.S. companies. Officials of the Miami-based Burger King have downplayed the deal as being unrelated to tax breaks, but the advantages are seemingly obvious.

http://www.bizjournals.com/buffalo/b...de-in-tax.html

[FMD]

Nogods?

[granpabob]

If my limited information on this is right. they will still have to pay 35% on any US earnings. they are making this move so they don't have to pay 35% to the US on earnings their foreign stores make. why would the US deserve taxes on foreign sales?