Erin Weir goes to Tim Hortons’ regulatory filings in search of the motivating factors of corporate tax breaks.
Perhaps more importantly, Tim Hortons became an American corporation when it merged with Wendy’s. Even after separation, it was locked into a tax-sharing agreement with Wendy’s.
When that agreement recently expired, there was no longer a reason to keep Tim Hortons organized as a US corporation when some 90% of its revenue is generated in Canada. In particular, it did not make sense for the company’s entire business, which is overwhelmingly conducted in Canadian dollars, to be taxed and analyzed in US dollars.
Therefore, it seems highly probable that Tim Hortons would have reorganized as a Canadian corporation even had Canada simply kept its corporate tax rates at US levels. If so, the Canadian government might have received a similar temporary boost in tax revenue from this reorganization without the ongoing loss of future tax revenue.