Wal-Mart uses tax havens to cut taxes on foreign units: advocacy group

(Reuters) - Wal-Mart Stores Inc WMT.N has built a network of 78 subsidiaries and branches in 15 offshore tax havens to minimize taxes on its operations outside the United States, said a report by tax reform advocacy group Americans for Tax Fairness released on Wednesday.

A girl walks along the checkouts at the Wal-Mart Supercenter in Springdale, Arkansas June 4, 2015. Wal-Mart will hold its annual meeting June 5, 2015. REUTERS/Rick Wilking

Wal-Mart, the world’s largest retailer, has assets worth at least $76 billion through shell companies domiciled in Luxembourg and the Netherlands, the report said.

The report says Wal-Mart does not list these subsidiaries in its annual filings and called on the U.S. Securities and Exchange Commission to require disclosure to make the tax practices transparent to investors.

Wal-Mart spokesman Randy Hargrove said the report contained erroneous information designed to mislead readers.

Hargrove said the company disclosed significant subsidiaries in its annual report, in compliance with SEC regulations. Wal-Mart has processes in place to comply with the tax laws of the countries where it operates, while maintaining transparency about its transactions and business structure with the U.S. Internal Revenue Service, he said.

The report was co-authored by an official from the United Food & Commercial Workers International Union, which supports a worker group that has pushed for various changes at Wal-Mart, including higher wages and governance reform.

The report also said 21 Fortune 500 companies were each known to have more subsidiaries in tax havens than the 78 Wal-Mart units identified in its research.

“It is our hope that this case study about Walmart’s secretive and extensive use of tax havens causes members of Congress to rethink their approach on how to tax these offshore profits and international tax issues in general,” the report says.

Wal-Mart gets about 30 percent of its $486 billion in annual revenue from outside of the United States.

The report said Wal-Mart’s subsidiaries in the tax havens owned at least 25 of its 27 foreign operations doing business in countries such as the United Kingdom, China and Japan.

Wal-Mart has 22 shell companies in Luxembourg, where it does not have a single store, and it paid less than 1 percent in tax there on $1.3 billion in profits from 2010 to 2013, the report said.

Hargrove said Wal-Mart paid $6.2 billion in U.S. federal income tax last year, or nearly 2 percent of all corporate income tax collected. He said Wal-Mart also paid more than $10 billion in payroll taxes on its 1.3 million U.S. workers.

Reporting by Sruthi Ramakrishnan in Bengaluru and Nathan Layne in Chicago; Editing by Lisa Von Ahn