- How Companies Get Rich < 3rd Market Watch > Corporate Deadbeats - How Companies Get Rich Off Of Taxes

BUT……… [Issue] The Burger King To Merge With Tim Hortons Burger King says merger is to: Become a holding company with unrelated restaurant brands Enhance global competitiveness BUT……… Burger King said that it’s considering a merger with Canadian-headquartered Tim Hortons Inc. to create the world’s third-largest quick-service restaurant chain.(when) You and your wallet have a big stake in huge tax-dodging deals being crafted by big American companies, like Burger King merging with Tim Hortons, the Canadian coffee and doughnut chain. Tim Hortons : the Canadian coffee and doughnut chain. 캐나다 커피전문점 팀호튼스 팀 호튼스는 인지율이 높지 않고, 자체 합병에 대한 효과는 거의 미비한데, 왜 M&A를 하는 것일까?

[Issue] The Burger King To Merge With Tim Hortons Burger King and other multinationals shirk through these so-called inversions, in which they move their headquarters, on paper, to escape … Burger King's Tim Hortons $11.4 Billion Merger Takes Advantage Of Low Canadian Tax Rates There are any strategic ramifications and this acquisition is primarily seen as financial maneuver Burger King said that it’s considering a merger with Canadian-headquartered Tim Hortons Inc. to create the world’s third-largest quick-service restaurant chain.(when) Tim Hortons : the Canadian coffee and doughnut chain. 캐나다 커피전문점 팀호튼스 팀 호튼스는 인지율이 높지 않고, 자체 합병에 대한 효과는 거의 미비한데, 왜 M&A를 하는 것일까?

The Effect of the Merger : Tax Inversions At the center of a spirited debate about this M&A, there is ‘tax inversions‘ Huge Tax-dodging Deals : Burger King's Tim Hortons $11.4 Billion Merger Takes Advantage Of Low Canadian Tax Rates In 2013, the burger chain’s corporate tax rate was 27.4 %, Tim Hortons paid taxes at a rate of 26.8 %. The combined corporate tax rate(according to OECD) in Canada is 26.3% vs. in the United States is 39.1% (Source: OECD, June 2014) [Effective Corporate Tax Rates For 2013]

Several ways multinationals don’t pay their fair share The use of offshore tax havens to convert profits into expenses From a 1986 change to Section 531 of the tax code - Companies could hold unlimited amounts of cash, provided it was in offshore accounts - Tax-deductible expenses : Pay their offshore subsidiaries royalties for the use of patents, logos and manufacturing techniques

Several ways multinationals don’t pay their fair share Do not immediately turn over as taxes (delaying the payment of taxes) multinationals earn profits today but pay their taxes by-and-by Congress is loaning these companies all that money they do not immediately turn over as taxes Congress let them keep that dough in return for their promise to pay their taxes years or decades from now—and sometimes, never As a result, Apple and GE owe at least $36 billion Microsoft nearly $27 billion Pfizer $24 billion in taxes on profits Apple and GE owe at least $36 billion in taxes on profits being held tax-free offshore, Microsoft nearly $27 billion and Pfizer $24 billion, according to Citizens for Tax Justice

Several ways multinationals don’t pay their fair share Corporations keep two sets of books One for shareholders and another for the IRS Congress lets companies reach back years to take advantage of deductions they could not take during unprofitable years Tax accounting lets companies depreciate, or write off, assets like computers, trucks and factories much faster than shareholder, or book, accounting => this makes the black ink of profits look red when examined by IRS auditors.

What cause this issue ? In 1909, Congress imposed a 15% penalty on cash hoarding 1986 amendment allows unlimited amounts of cash to be held in offshore accounts Less monitoring because Congress has reduced the number of auditors Only focus on issues the company has been warned about Interest free loan and negative tax rate through deferred taxes Take advantage of deductions from prior years 2 sets of books: shareholder and IRS Smaller tax rate and deferred taxes can be reinvested to finance other pjts U.S. 35% vs Canada’s 15% “allow us to safely own far more assets than our equity capital alone would permit.” Warren Buffet

Tax incentive for companies Korea today Expected positive effects Promote company investment Reduce gap between corporate and household income Vitalize the domestic economy But we need to think about lessons learned from this article Tax incentive for companies big company invests in small companies. Receive tax benefits when company increases their recruitment. company affects domestic local economy