Amid tax backlash, Burger King acquires Tim Horton's but keeps US HQ

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Amid tax backlash, Burger King acquires Tim Horton's but keeps US HQ
MOSCOW - APRIL 29: The logo of the fast food chain "Burger King", April 29, 2014, Moscow, Russia. Burger King is a global chain of hamburger fast food restaurants
NEW YORK, NY - AUGUST 25: A Tim Horton's cafe is seen in Manhattan on August 25, 2014 in New York City. It has been confirmed that American fast food giant Burger King is in discussions for a possible take-over of Canadian coffee and cafe chain Tim Horton's. Shares of Tim Hortons Inc and U.S. Burger King Worldwide Inc rose after news of the merger talk. The new company would be based in Canada which has a lower corporate tax rate than the United States. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - AUGUST 25: A person walks past a Tim Horton's cafe in Manhattan on August 25, 2014 in New York City. It has been confirmed that American fast food giant Burger King is in discussions for a possible take-over of Canadian coffee and cafe chain Tim Horton's. Shares of Tim Hortons Inc and U.S. Burger King Worldwide Inc rose after news of the merger talk. The new company would be based in Canada which has a lower corporate tax rate than the United States. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - AUGUST 25: People walk past a Tim Horton's cafe in Manhattan on August 25, 2014 in New York City. It has been confirmed that American fast food giant Burger King is in discussions for a possible take-over of Canadian coffee and cafe chain Tim Horton's. Shares of Tim Hortons Inc and U.S. Burger King Worldwide Inc rose after news of the merger talk. The new company would be based in Canada which has a lower corporate tax rate than the United States. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - AUGUST 25: People walk past a Tim Horton's cafe in Manhattan on August 25, 2014 in New York City. It has been confirmed that American fast food giant Burger King is in discussions for a possible take-over of Canadian coffee and cafe chain Tim Horton's. Shares of Tim Hortons Inc and U.S. Burger King Worldwide Inc rose after news of the merger talk. The new company would be based in Canada which has a lower corporate tax rate than the United States. (Photo by Spencer Platt/Getty Images)
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By RYAN GORMAN

Burger King announced Tuesday that it purchased Canadian doughnut maker Tim Horton's but will keep its headquarters in the U.S. after outrage over speculation it would move up north to avoid taxes.

Experts believed the Miami-based company wanted to acquire the chain to move corporate offices to Canada because of significantly lower tax rates, but the nation's second-largest fast food chain shot down the rumors in a Facebook post.

"We hear you. We're not moving, we're just growing and finding ways to serve you better," said the Facebook post. "Our headquarters will remain in Miami where we were founded more than 60 years ago and... BKC will continue to pay all of our federal, state and local U.S. taxes."

The two entities will have common ownership but continue to be run as separate brands, the chain said.

Speculation ran rampant the move was to avoid high American taxes because of the gulf in tax rates between the two countries.

The combined amount of taxes between the federal, state and local levels in the U.S. average about 40 percent, according to the Washington Post. Similar corporate taxes in Canada add up to a measly 26 percent.

Among Organization for Economic Cooperation and Development (OECD) countries, the U.S. ranks first in taxes and Canada ranks below even Luxembourg, a European enclave known mainly for being a tax and banking haven.

A 14 percent discount on taxes for a behemoth the size of the combined Burger King – Tim Horton's would have allowed The King to line his royal pockets with enough savings to potentially pay for the acquisition in only a few years.



About 25 percent of the roughly $10 billion takeover is being financed by billion Berkshire Hathaway chairman Warren Buffet, according to the Wall Street Journal.

This curiously put the "Oracle of Omaha" in a position to potentially help an American company avoid paying taxes after decades of saying everyone, companies included, needs to pay their fair share.

Burger King's move up north would have been part of a growing trend of U.S. corporations fleeing the States to avoid the highest corporate tax rates in the developed world.

Dozens of companies have reincorporated abroad since the 1980s as they look to avoid Uncle Sam's growing tax burden. The moves started as a relative trickle, but have become more of a flow in the last decade.

Burger King would have been the 48th company to immigrate abroad – known as a corporate inversion – since 2005, according to Congressional Research Service data compiled earlier this year by the Post.

More than 70 have made the move since 1983.

That's not to say taxes are the only reason Burger King may shift its headquarters up north.

Breakfast menus are also the most rapidly growing segment of the fast food business, accounting for nearly 90 percent of the industry's revenue growth from 2007 to 2012, according to trade publication Burger Chain.

But that doesn't mean the company did not at least consider the benefits of a lower tax bill despite Tuesday's announcement.



Burger King HQ Could Soon Leave U.S. For Canada

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