Walmart has used foreign tax havens to shelter $76 billion in assets avoiding having to pay $3.5 billion in income tax over the last six years according to a Americans for Tax Fairness report.
The report —”The Wal-Mart Web: How the World’s Biggest Corporation Secretly Uses Tax Havens to Dodge Taxes” - shows the company used a “network of 78 subsidiaries and branches in 15 overseas tax havens, which may be used to minimize foreign taxes where it has retail operations and to avoid U.S. tax on those foreign earnings.” .
Research for the study was carried out by the United Food & Commercial Workers International Union.
The report said Walmart subsidiaries that account for 10% or more of a company’s assets and income, are required by law to be listed in 10.K filings with the U.S. Securities and Exchange Commission—but the company "had simply failed to do so".
It said Walmart shell companies in just two countries, Luxembourg and the Netherlands, account for $76 billion in assets—which is 90% of the assets in the company’s International Division, as well as 37% of its $205 billion total assets—decisively higher than the SEC’s 10% requirement.
Tax Experts refer to Luxembourg, where Walmart has registered 22 of its shell companies, the “magical fairyland” because profits seem "supernaturally protected from taxation in the tiny country".
The report claims Walmart transferred more than $45 billion in assets to its subsidiaries in Luxembourg, reporting tax payments of less than 1% to the country on $1.3 billion in profits between 2010-2013—even though the company does not even have one store in there. One third of Walmart's annual profits come from its International Division, yet the majority of its foreign companies are owned by subsidiaries in these tax havens.
Walmart company spokesperson Randy Hargrove said the Americans for Tax Fairness report was incomplete and “designed to mislead.” He claimed Walmart has “processes in place to comply with applicable SEC and IRS rules, as well as the tax laws of each country where [they] operate.”
Americans for Tax Fairness has called on U.S. and foreign authorities to carry out their own investigations with several key points to address. It said there was an obvious need for an IRS audit to track the "elusive assets". It has also recommended the European Commission to investigate whether Luxembourg's actions as a tax haven amount to “illegal state aid.”