almart Stores owns more than $76 billion (R925 billion) of assets through a web of units in offshore tax havens around the world. But you wouldn’t know it from reading the retailer’s annual report.
A new study has found that Walmart has at least 78 offshore subsidiaries and branches, more than 30 created since 2009 and none mentioned in US securities filings. Overseas operations have helped the company cut more than $3.5 billion off its income tax bills in the past six years, its annual reports show.
The study, researched by the United Food & Commercial Workers’ International Union and published this week in a report by Americans for Tax Fairness, found that 90% of Walmart’s overseas assets are owned by subsidiaries in Luxembourg and the Netherlands, two of the most popular corporate tax havens.
Units in Luxembourg – where the company has no stores – reported $1.3 billion in profit between 2010 and 2013, and paid tax at a rate of less than 1%, according to the report.
All of Walmart’s roughly 3 500 stores in China, Central America, the UK, Brazil, Japan, South Africa and Chile appear to be owned through units in tax havens such as the British Virgin Islands, Curacao and Luxembourg, according to the report from the advocacy group. The union conducted its research using publicly available documents filed in various countries by Walmart and its subsidiaries.
Randy Hargrove, a Walmart spokesperson, called the report incomplete and “designed to mislead”. He said the company had “processes in place to comply with applicable US Securities and Exchange Commission (SEC) and Internal Revenue Service rules, as well as the tax laws of each country where we operate”.
The union behind the study backs the Organisation United for Respect at Walmart, a group that campaigns for wage increases and more predictable schedules. Walmart has historically resisted unions and discourages employees from joining them.
The report comes a week after the G20 nations unveiled their latest effort to combat multinational corporate tax avoidance. The body wants companies to disclose to regulators where they book profits, employees and sales, so tax authorities can be aware of discrepancies between where corporations report income and where they have operations.
Hargrove pointed to guidance issued by the SEC that permits companies to avoid disclosure of subsidiaries with significant “intercompany transactions”. He said Walmart’s tax savings overseas were driven by lower rates in markets, including Canada and the UK.
Companies such as Google, Apple and Starbucks have come under fire for avoiding billions of dollars of income taxes by attributing profits to mailbox subsidiaries in low-tax jurisdictions like Bermuda.
The G20 has directed the Organisation for Economic Cooperation and Development (OECD) to develop plans to crack down on such strategies.