Wal-Mart Has Found a New Discount: Its Taxes

Issue 06-29-15   |   Reviewer:   Larry Tunnell, Ph.D., CPA

Abstract

Wal-Mart Stores Inc. owns more than $76 billion of assets through a web of units in offshore tax havens around the world. A new study has found Wal-Mart has at least seventy-eight offshore subsidiaries and branches, more than thirty created since 2009 and none mentioned in U.S. securities filings. Overseas operations have helped the company cut more than $3.5 billion from 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 in a report by Americans for Tax Fairness, found 90 percent of Wal-Mart’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 profits between 2010 and 2013 and paid tax at a rate of less than 1 percent, according to the report. All of Wal-Mart’s roughly 3,500 stores in China, Central America, the U.K., 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.

Randy Hargrove, a Wal-Mart spokesman, called the report incomplete and “designed to mislead” by its union authors. He pointed to guidance issued by the SEC that permits companies to avoid disclosure of subsidiaries with significant “intercompany transactions.” He said Wal-Mart’s tax savings overseas were driven by lower rates in markets including Canada and the U.K.

Companies such as Google Inc., Apple Inc. and Starbucks Corp. have come under fire for avoiding billions of dollars of income taxes by attributing profits to mailbox subsidiaries in low-tax jurisdictions like Bermuda. Wal-Mart’s accumulated offshore earnings have doubled to $23.3 billion in 2015 from $10.7 billion 2008. Wal-Mart paid $6.2 billion in U.S. income tax last year, Hargrove, the company spokesman, said, or “nearly 2 percent of all corporate income tax collected by the U.S. Treasury.”





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