WHEN President Barack Obama said last September that he would get tough on companies that avoid tax through “inversions”—merging with or buying foreign firms so as to shift their domicile abroad—some wondered if this would end a wave of corporate emigration. Some high-profile deals were called off, but other companies have continued to tiptoe out of America to places where the taxman is kinder and has shorter arms. On August 6th CF Industries, a fertiliser manufacturer, and Coca-Cola Enterprises, a drinks bottler, both said they would move their domiciles to Britain after mergers with non-American firms. Five days later Terex, which makes cranes, announced a merger in which it will move to Finland.
For many firms, staying in America is just too costly. Take Burger King, a fast-food chain, which last year shifted domicile to Canada after merging with Tim Horton’s, a coffee-shop operator there. Before the move, it would have had to pay up to 39% tax on foreign earnings when it brought them into America. Now that it is Canadian, it pays 39% only on profits earned in America, about 26% on Canadian profits and the (often lower) local rate...
from The Economist: Business http://ift.tt/1IKt0ll
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