U.S. tax reform will end new corporate inversions in Canada, say economists
MONTREAL — Economists say recently enacted U.S. tax reforms will hurt Canada’s competitiveness and give companies another reason to set up shop in or even relocate south of the border.
Ian de Verteuil of CIBC World Markets says the drop in the U.S. corporate tax rate to 21 per cent from 35 per cent makes Canada a less attractive destination to locate a head office.
In a report, he says people shouldn’t expect any more inversions that have been used by Restaurant Brands International Inc. to buy Tim Hortons and Valeant Pharmaceuticals International, Inc. to acquire Biovail Corporation.
Inversions happen when a foreign company merges with a U.S. or domestic firm, resulting in a new parent company being based in another country with lower tax rates.