Walmart accused of creating $76B tax haven

Walmart (NYSE:WMT) is being accused of having created 78 subsidiaries and branches in 15 offshore tax havens to cut taxes on foreign operations.

According to a report by Americans for Tax Fairness, the big-box retailer holds at least $76 billion in assets through shell companies based in Luxembourg and the Netherlands, countries that are low-tax havens, reported USA Today. The advocacy group speculates that the total could be higher because Walmart holds entities in other low-tax havens including Hong Kong, the Caymen Islands, Switzerland and Curacao.

For example, the reported stated that Walmart paid less than 1 percent on taxes in Luxembourg on $1.3 billion in profits from 2010 to 2013.

The subsidiaries do not own Walmart stores, but own at least 25 out of 27 of the company's foreign operations in the United Kingdom, Brazil, Japan and China, where the retailer has locations with employees.

Using a tax haven minimizes the firm's foreign taxes where it has retail operations and avoids paying U.S. taxes on earnings until they are shifted domestically. Plus, Walmart supposedly took a $2.4 billion low-interest, short-term loan from its tax haven subsidiaries in 2014, giving it access to foreign earnings without paying U.S. taxes.

The reports seems reminiscent of Walmart's 2013 bribery allegations in Mexico. In this case, a Delaware judge ordered Walmart to turn over everything it knew to investors about allegations that Walmart's Mexican unit had paid to facilitate construction of new stores and warehouses.

However, Walmart spokesman Randy Hargrove called the report incomplete and full of erroneous information meant to mislead readers, reported CBSNews.

"When calculating total assets, this calculation incorrectly includes intercompany assets, primarily investment in our wholly-owned subsidiaries and intercompany loans which both eliminate on consolidation. The methodology is flawed and based upon statutory reports prior to intercompany eliminations which occur during consolidation," said a company statement.

In addition, Walmart said it paid $6.2 billion in U.S. federal corporate income taxes last year, or 2 percent.

For more:
-See this USA Today article
-See this CBSNews article

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