What was the effective income tax rate for Burger King in 2022?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Statutory rate | 26.5 % | 26.5 % | 26.5 % |
| Costs and taxes related to foreign operations | 5.2 | 5.3 | 3.8 |
| Foreign tax rate differential | (12.7) | (15.1) | (13.7) |
| Change in valuation allowance | 2.7 | (0.8) | (0.7) |
| Change in accrual for tax uncertainties | (0.6) | (6.2) | (26.7) |
| Intercompany financing | (1.8) | (2.7) | 1.2 |
| Intra-Group reorganizations | — | (25.3) | — |
| Other | 0.8 | 0.1 | 1.0 |
| Effective income tax rate | 20.1 % | (18.2) % | (8.6) % |
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, the effective income tax rate in 2022 was (8.6) %. This means that Burger King's actual income tax expense, as a percentage of its pre-tax income, was a negative 8.6% in 2022.
Several factors contributed to the effective income tax rate. The statutory rate was 26.5%. Costs and taxes related to foreign operations accounted for 3.8%. The foreign tax rate differential was (13.7) %. The change in valuation allowance was (0.7) %. The change in accrual for tax uncertainties was (26.7) %. Intercompany financing accounted for 1.2%, and other factors accounted for 1.0%.
Prospective franchisees should be aware that the effective income tax rate can fluctuate significantly from year to year, as seen by the changes from 2022 to 2024. These fluctuations can be influenced by various factors, including changes in tax laws, foreign operations, and internal financing strategies. It is important to consult with a financial advisor to understand the potential tax implications of investing in a Burger King franchise.