Walmart executives appear to have way more money than they know what to do with, but know exactly where to hide it. Its big box is roomy enough to hide billions in un- and undertaxed profits, according to a new report by a watchdog group. While the retail giant is known for capitalizing on corporate tax breaks and driving the offshoring of jobs to the Global South, little is known about how much of its assets are hidden from Uncle Sam and offshored to far-flung tax havens.
According to the financial investigation, Walmart is stashing “at least $76 billion worth of assets in 78 subsidiaries and branches located in 15 overseas tax havens.” Though that figure is disputed by Walmart, Americans for Tax Fairness (ATF) maintains that these subsidiaries operate as a vast network of shell companies. The report, by researchers with ATF and United Food and Commercial Workers, argues that this arrangement of financial black sites lets Walmart circumvent US tax codes and enjoy minimal taxation abroad.
Luxembourg is one of the cushiest European tax havens: ATF calculates that Walmart has parked about $45 billion in assets in this notorious financial fiefdom. Walmart’s web of financial self-dealing spans a global shell game that shuttles revenues into opaque financial domiciles like the Cayman Islands and Singapore. These are in turn linked into Walmart’s global retail network:
The countries in which Walmart’s international operating companies are owned by tax-haven based subsidiaries include: Africa (360 stores in South Africa, plus 36 stores in Botswana, Ghana, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Swaziland, Tanzania, Uganda and Zambia), Brazil (557 stores), Central America (690 stores in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua), Chile (404 stores), China (411 stores), Japan (430 stores), and the United Kingdom (592 stores)….
The report suggests that Walmart is avoiding taxes by channeling foreign earnings though “hybrid financial instruments and complex inter-company debt arrangements,” including an arcane mechanism of a hybrid loan, and “borrowing” billions in short-term loans from Walmart’s own subsidiaries.
Walmart spokesperson Randy Hargove argued in its public response that it complies with tax laws of the United States and countries where it operates. The company contends that ATF’s accounting is based on misleading calculations of Walmart’s investments in subsidiaries and intercompany loans, and that the official figure on foreign assets is $80.5 billion, mostly in “retail store buildings, fixtures, inventory and distribution facilities physically located” overseas.
ATF isn’t trying to dictate how Walmart spends its money. But since we don’t know how much Walmart contributes to the estimated $90 billion that the public loses each year to corporate tax havens, activists demand a full accounting of just where the money is: