Report Finds That Burger King “Inversion” Will Allow Company to Dodge $400 Million to $1.2 Billion in US Taxes Over Four Years

WASHINGTON Americans for Tax Fairness (ATF) will publicly release a report Thursday showing that Burger King’s planned “inversion” will allow the company and its leading shareholders to dodge an estimated $400 million to $1.2 billion in US taxes between 2015 and 2018. This contradicts the assertion by CEO Daniel Schwartz that Burger King’s plan to become a Canadian company “is really not about taxes.”

The report is especially topical because Tim Hortons, the Canadian corporation with which Burger King is merging, has announced shareholders will vote on the deal on Tuesday, Dec. 9, and that it expects the deal to close Friday, Dec. 12.

The ATF report finds that by renouncing its US corporate “citizenship” Burger King could dodge $117 million in US taxes on profits that it held offshore at the end of 2013. Burger King has been able to indefinitely defer paying taxes on those profits under US law; by becoming a Canadian company it may never pay US taxes on those profits. In addition, Burger King may avoid an additional $275 million in US taxes between 2015 and 2018 because under Canadian law it will no longer have to pay (even on a deferred basis) US taxes on future worldwide profits.

The report also reveals that Burger King’s largest shareholders could save as much as $820 million in capital gains taxes because of the way the company has structured the inversion.

The report also found that Burger King is the #1 burger chain serving members of the US Armed Forces. It estimates that over the next 15 years, Burger King could receive more than $150 million in royalties and marketing support for its military restaurants.

The report is available today on an embargoed basis and can be found at this link. The embargo will lift at 12:01 AM on Thursday, Dec. 11, and the report also will be posted on this web page at that time.

“Burger King says it’s not really about taxes, said Frank Clemente, executive director of Americans for Tax Fairness. “But the corporation and its shareholders could dodge more than a billion dollars in US taxes over the next few years. It’s not credible to say that a potential tax break of $1 billion didn’t influence its decision to become a Canadian company.”

“Burger King’s decision to renounce its US citizenship and become a Canadian company will mean that while US military families support Burger King by buying its food, Burger King will no longer support service members by paying its fair share of taxes,” added Clemente.

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