Published on : Aug 25, 2014
US’s second largest burger chain Burger King Worldwide Inc. (BKW), is aiming at buying Tim Horton’s Inc. (THI) and shifting its headquarters to Canada thereby becoming a modern-day American company to shift its base to a country with lower-taxes.
The majority stake of Burger King is owned by 3G Capital and such collaboration as mentioned above would create the third largest fast food chain in the world with THI, which is Canada’s largest coffee and doughnuts seller. As against 40 percent in the US, the rate of corporate tax in Canada is 26.5%.
This business deal is likely to create a controversial debate over the issue of American companies looking for lower corporate tax haven for their businesses. The Obama administration however, has affirmed that such actions would be dealt with.
This business deal states that majority of the stake of the new company will remain in the hands of 3G Capital and the remainder will be held with Burger King and Tim Horton’s and these two chains will be operating as stand-alone brands.
These two chains when combined will generate revenue worth $22 billion and will have about 18000 outlets in almost 100 countries.
As a measure of “inversion”, many American companies between June and July this year had declared their plans of relocating to another country, after the Obama administration had criticized this move of companies to relocate to other countries as a tax cutting measure.
A major problem that many fast-food restaurants in US are facing is stiff competition and lower degree of consumer confidence which in turn has an adverse impact on their businesses.