Canada Seeks to Lure U.S. Businesses with Lower Corporate Taxes

With Burger King planning to relocate there after completing its buy of coffee-and-donut chain Tim Hortons for about $11.4bn, Canada is emerging as the latest tax haven for U.S. firms fleeing a high tax code at home.

Despite likely objections here to the latest tax inversion deal, Canada is setting out a welcome mat for the newest American corporate transplant. It’s also inviting others to follow. Having slashed its tax rates by about a quarter the past eight years, Canada has no problem with U.S. firms seeking tax shelter there. They like it and see it as being good for business.

The incentive for U.S. firms to set up shop in Canada is that the government only taxes corporate income generated within the country’s borders. That’s in marked contract to the situation in the United States, where profits earned by an American firm’s foreign operations are taxed if they’re repatriated.

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Despite likely objections here to the latest tax inversion deal, Canada is setting out a welcome mat for the newest American corporate transplant. It’s also inviting others to follow. Having slashed its tax rates by about a quarter the past eight years, Canada has no problem with U.S. firms seeking tax shelter there. They like it and see it as being good for business.

The incentive for U.S. firms to set up shop in Canada is that the government only taxes corporate income generated within the country’s borders. That’s in marked contract to the situation in the United States, where profits earned by an American firm’s foreign operations are taxed if they’re repatriated.

Read Full Article