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

2. 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?

3. [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?

4. 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]

5. 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

6. 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

7. 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.

8. 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

9. 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