No Tax for Walmart: How the Largest Company in the World Tricked the US Treasury
Published in L'espresso
(Italy) on 17 June 2015
by Vittorio Malagutti (link to original)
(Italy) on 17 June 2015
by Vittorio Malagutti (link to original)
Translated from
by Rosalyn Munton.
Edited by Bora Mici.
A network of off-shore companies in order to bypass American taxes, with Luxembourg at its center: The large-scale retail giant paid 1 percent tax on profits of $1.3 billion.
It has a secret network of 78 companies scattered among 15 offshore havens around the world, beginning with Luxembourg. Billions of dollars are bouncing from one end of the planet to the other in the form of loans, and various games of financial engineering to disguise the profits. This is how the great chain of Wal-Mart stores, the largest business in the world by revenue ($485 billion in 2014), managed to elude the U.S. Treasury, saving hundreds of millions of dollars in taxes. The accusations come from Americans for Tax Fairness, a U.S. organization, which campaigns for fiscal transparency and which has published a dossier on the retail giant's relaxed fiscal affairs.
The key elements to these affairs seem to be tax evasion on a huge scale, along with Luxembourg (yet again), which over the last few months has been at the center of the world scandal renamed LuxLeaks, regarding agreements between various multinationals and the Grand Duchy to reduce taxes to a minimum. Essentially, from 2011, Wal-Mart transferred control of activities for $45 billion, under the names of 22 different holding companies, to the small European state. The result? The American company paid taxes of less than 1 percent on its profits of $1.3 billion, made between 2010 and 2013.
Wal-Mart has set down roots in many countries around the world, from the United Kingdom to China, from Brazil to Japan, but in 90 percent of the cases, controls on these companies outside the U.S. depend on subsidiaries in Luxembourg or the Netherlands, another European country with generous tax laws. The most common system for reducing taxes by as much as possible is the so-called intercompany loan. It works like this: Companies in tax havens lend money to companies in America, and the relative interest, cashed in Luxembourg or the Netherlands, is almost tax-free.
So that's how offshore holdings become extremely rich bank vaults, which contribute to the group's global profits. And that's not all. Eventually the money is repatriated, without paying tax this time either, in order to support the group's activities in America. In light of this information, Americans for Tax Fairness is asking for intervention from the Treasury and the SEC, the Stock Exchange regulation authority.
Multinationals bypassing taxes in their home countries has been a topic wrought with controversy over the last few months in the United States. Numerous large corporations, among them Apple, Google, Microsoft, the pharmaceutical company Pfizer, and more, have accumulated tens of billions of dollars in foreign deposits with huge tax savings. Barack Obama's government has promised new laws to make these fiscal gymnastics less straightforward. It won't be easy. Every year, multinationals spend millions of dollars financing lobby campaigns on Congress, and with great success, as the Wal-Mart case shows. So far, the company has found the U.S. legislative body to be very understanding.
It has a secret network of 78 companies scattered among 15 offshore havens around the world, beginning with Luxembourg. Billions of dollars are bouncing from one end of the planet to the other in the form of loans, and various games of financial engineering to disguise the profits. This is how the great chain of Wal-Mart stores, the largest business in the world by revenue ($485 billion in 2014), managed to elude the U.S. Treasury, saving hundreds of millions of dollars in taxes. The accusations come from Americans for Tax Fairness, a U.S. organization, which campaigns for fiscal transparency and which has published a dossier on the retail giant's relaxed fiscal affairs.
The key elements to these affairs seem to be tax evasion on a huge scale, along with Luxembourg (yet again), which over the last few months has been at the center of the world scandal renamed LuxLeaks, regarding agreements between various multinationals and the Grand Duchy to reduce taxes to a minimum. Essentially, from 2011, Wal-Mart transferred control of activities for $45 billion, under the names of 22 different holding companies, to the small European state. The result? The American company paid taxes of less than 1 percent on its profits of $1.3 billion, made between 2010 and 2013.
Wal-Mart has set down roots in many countries around the world, from the United Kingdom to China, from Brazil to Japan, but in 90 percent of the cases, controls on these companies outside the U.S. depend on subsidiaries in Luxembourg or the Netherlands, another European country with generous tax laws. The most common system for reducing taxes by as much as possible is the so-called intercompany loan. It works like this: Companies in tax havens lend money to companies in America, and the relative interest, cashed in Luxembourg or the Netherlands, is almost tax-free.
So that's how offshore holdings become extremely rich bank vaults, which contribute to the group's global profits. And that's not all. Eventually the money is repatriated, without paying tax this time either, in order to support the group's activities in America. In light of this information, Americans for Tax Fairness is asking for intervention from the Treasury and the SEC, the Stock Exchange regulation authority.
Multinationals bypassing taxes in their home countries has been a topic wrought with controversy over the last few months in the United States. Numerous large corporations, among them Apple, Google, Microsoft, the pharmaceutical company Pfizer, and more, have accumulated tens of billions of dollars in foreign deposits with huge tax savings. Barack Obama's government has promised new laws to make these fiscal gymnastics less straightforward. It won't be easy. Every year, multinationals spend millions of dollars financing lobby campaigns on Congress, and with great success, as the Wal-Mart case shows. So far, the company has found the U.S. legislative body to be very understanding.