The US government has begun cracking down on American companies relocating overseas for tax purposes in a move known as corporate tax inversion. The most recent high profile case of tax inversion is that of US fast food giant Burger King buying Canadian donut company Tim Horton’s. Burger King plans to relocate all of its head office divisions, including taxes and finances, north of the border. This kind of tax inversion works when a US based business merges with or is acquired by a foreign company based in a country with a lower tax rate. The Obama administration has not commented specifically on the Burger King case. However, it has outlined new rules to stop U.S. companies from doing exactly what Burger King has done, in order to avoid paying taxes in the United States. The Treasury Department has outlined new rules which will make these corporate inversions less attractive to US companies wishing to move their tax operations overseas. The new rules will ban techniques, no matter how creative , that companies often use to try to cut their tax bills. Tighter regulations are intended to make it harder for US companies to be ‘foreign’ owned in the first place, thereby ensuring that US companies are owned by US operators and paying taxes in the U.S. The U.S. Treasury Secretary, Jacob Lew, told Canadian news site CBC that the aim of these new regulations is to put the brakes on the amount of companies that are able to escape paying taxes in the USA. Subsequently the idea of moving out of the country will no longer be a more lucrative option for those businesses. Burger King, after its high profile takeover of Tim Horton’s, has refuted claims that their takeover was purely for tax purposes, and has pointed to the tax history of both companies, stating that they paid virtually identical tax rates in the last fiscal year. President Obama has praised the Treasury for its plans, and has spoken of his desire to close any loopholes that companies find to avoid paying their taxes in the U.S. He is also supporting a possible further tax reform which would reduce the corporate tax rate, close any other loopholes that businesses find, and make tax codes and rates simpler for U.S. based corporations. Burger King and Tim Horton’s, however, do not expect these new rules to affect their merger, which is moving ahead at full speed.

1. U.S. Cracks Down
on Tax Inversions
Garza & Harris

2. The US government has begun cracking
down on corporate tax inversion.
 The most recent high profile case of tax
inversion is that of US fast food giant
Burger King buying Canadian donut
company Tim Horton’s.
 Burger King plans to relocate all of its
head office divisions, including taxes and
finances, north of the border.
 This kind of tax inversion works when a US
based business merges with or is acquired
by a foreign company based in a country
with a lower tax rate.

3. New rules will ban techniques that companies
often use to cut their tax bills
 The Obama administration has not commented specifically on the Burger King case.
However, it has outlined new rules to stop U.S. companies from doing exactly what Burger
King has done to avoid paying taxes in the United States
 The Treasury Department has outlined new rules which will make these corporate
inversions less attractive to US companies wishing to move their tax operations overseas.
 Tighter regulations are intended to make it harder for US companies to be ‘foreign’ owned
in the first place, thereby ensuring that US companies are owned by U.S. operators and
paying taxes in the U.S.

4. Putting the brakes on companies who use
Tax Inversion to avoid US paying taxes.
 According to The U.S. Treasury Secretary, Jacob Lew, the idea of moving out of the
country will no longer be a more lucrative option for those businesses.
 Burger King, after its high profile takeover of Tim Horton’s, has refuted claims that their
takeover was purely for tax purposes, and has pointed to the tax history of both companies,
stating that they paid virtually identical tax rates in the last fiscal year.
 Eligible businesses must be able to guarantee the creation of high paying jobs and
community involvement. In the past, awards have ranged from $194,000 to $50 million.

5. Praise from President Obama for the
Treasury’s plan to close loopholes.
 President Obama is also supporting a possible further tax reform which would
reduce the corporate tax rate, close any other loopholes that businesses find,
and make tax codes and rates simpler for U.S. based corporations.
 Burger King and Tim Horton’s, however, do not expect these new rules to affect
their merger, which is moving ahead at full speed.