Taxes not an issue in Burger King-Tim Hortons merger: BK CEO

Photo the Canadian Press

The $12.5-billion deal that would see US-based Burger King swallow Canadian coffee-and-donuts chain Tim Hortons would make the combined company the third-biggest fast food company in the world.

But Burger King first had to fend off criticism that the move is nothing more than a tax dodge.

Burger King's 33-year-old CEO Daniel Schwartz the company, which will remain independently managed and based in Miami, will continue to pay American federal, state and municipal taxes.

Any savings, he claims, will be negligible.

"Tax wasn't really a driver for this deal," he said on a conference call with media this morning. "The tax rate that we pay at Burger King today is in the mid-20s, which is consistent with the statutory tax rate in Canada and is consistent with what Tim Hortons pays.

"We'll still be paying federal taxes, all the same taxes we were paying in the past in the US we are going to continue to pay in the US. Our rate won't change materially."

The deal has attracted both criticism and scrutiny in the United States as more and more large companies engage in a practice called inversion.

That involves companies moving their headquarters to foreign countries to avoid paying relatively high US corporate taxes.

If the deal is completed, the company's global headquarters will be in Canada.

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