A new report says Walmart owns more than $76 billion of assets, but it’s not sitting around anywhere in the United States. Rather, the assets are held by at least 78 offshore tax havens around the world, none of which are mentioned in U.S. securities filings.

A study by the the United Food & Commercial Workers International Union published today [PDF] in a report by Americans for Tax Fairness says that all of Walmart’s 3,500 stores or so in China, Central America, the U.K., Brazil, Japan, South Africa and Chile seem to be owned through subsidiaries in places like the British Virgin Islands, Curacao and Luxembourg.

A total of 90% of Walmart’s overseas assets are owned by units in Luxembourg — where the company doesn’t have any stores — and the Netherlands, according to publicly available documents the study used for its research.

Walmart spokesman Randy Hargrove told Bloomberg that the report is incomplete and “designed to mislead” by its union authors, and says the company has “processes in place to comply with applicable SEC and IRS rules, as well as the tax laws of each country where we operate.”

He adds that guidance issued by the SEC allows companies to avoid disclosing subsidiaries with significant “intercompany transactions,” and that Walmart paid $6.2 billion in U.S. income tax last year, or “nearly 2 percent of all corporate income tax collected by the U.S. Treasury.”

In a statement to Consumerist, Hargrove calls the $76 billion calculation inaccurate.

“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.”

Instead, Hargrove says that as disclosed in its last form 10K (footnote 14) the Walmart International segment has total assets after intercompany eliminations of $80.5 billion, the vast majority of which are retail store buildings, fixtures, inventory and distribution facilities physically located in the countries where we serve customers.”

The advocacy group called out one strategy that Walmart uses in Luxembourg, where the company created 20 new subsidiaries since 2009, is known as a hybrid-loan. Under this system, companies’ offshore units can take tax deductions for interest paid to their parents in the U.S., though the parent doesn’t include that interest as taxable income in the U.S.

Americans for Tax Fairness is now urging officials to take action: In the U.S., it wants the SEC to ask Walmart to explain its failure to disclose its 78 subsidiaries and branches in tax havens, and require it to make a a complete list of its business entities public, so investors can make informed decisions based on the company’s tax practices.

The group also urges the the Internal Revenue Service to audit Walmart’s use of subsidiaries in tax havens, “including the transfer of billions of dollars to its tax-haven subsidiaries and its use of various financial instruments to move taxable income out of the United States,” the report says, and analyze its short-term offshore loans that fund some of its U.S. operations to determine whether or not Walmart has been avoiding paying taxes in the U.S.

Across the pond, the group says the European Commission should “determine whether Luxembourg has been providing Walmart with sweetheart tax deals equivalent to illegal state aid.”

It wouldn’t be the first time — Bloomberg notes that the EU has issued preliminary findings that other companies have been using similar strategies, including Starbucks in the Netherlands and Apple in Ireland.

The Walmart Web: How the World’s Biggest Corporation Secretly Uses Tax Havens to Dodge Taxes [Americans for Tax Fairness]
Wal-Mart Has $76 Billion in Undisclosed Overseas Tax Havens [Bloomberg]

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