Legal of Business
Written Article I/Burger King & Tim Horton Merger
Jennifer Hebebrand

“Burger King’s potential move to Canada as part of a Tim Horton’s buy has drawn the ire of politicians and put the spotlight back on corporate tax loopholes.”
What effect does Burger King, an American based company, merging with Tim Horton’s, a Canadian based company, have on the financials for these corporations? First, you must look at the economy, in general, for the last several years and the toll it has taken on companies. In an effort to boost their bottom line and maximize profits, tax inversion is one way to lessen that toll. Take into account the recent changes in healthcare and the strict guidelines that companies must follow for part-time employees, companies now have to pay more for employees that have health-care and reduce hours of part-time employees or risk paying a penalty if they work over 29 hours over a period of time and are not offered full-time benefits. That along with the slow economy makes corporations look for loopholes to increase revenue. If you merge with a company outside the United States you no longer have to worry about paying taxes on revenue earned outside the U.S.
There are also political ramifications, Washington and the IRS do not look kindly on any type of tax invasion, legal or not, that takes money outside of the United States. Many politicians have called for a boycott of Burger King, even though a NAFTA free trade agreement that currently exists between Canada, Mexico and the United States, makes the merger perfectly legal. Even the famous Warrant Buffett, who has offered in the past to help deal with the United States deficit, has committed three billion dollars of preferred equity financing to help shore up the deal.
Burger King is currently owned by 3G Capital, a private Brazilian equity firm that acquired them in