Wal-Mart Stores, Inc., is being singled out as a tax dodger because of its creative use of overseas tax havens and 78 subsidiaries.
The detailed report from the Americans for Tax Fairness includes brief mentions of the U.S. company’s holdings in Central America.
Wal-Mart’s Central American operations include 217 stores in Costa Rica, 89 in El Salvador, 217 in Guatemala, 81 in Honduras and 86 in Nicaragua, according to the organization’s report.
The Central American operations are held by TFB Corp., NV, located in Curaçao, said the report.
Americans for Tax Fairness says it is a coalition of 425 national and state organizations that believe in greater revenue to meet the growing needs of the United States.
Wal-Mart has built a vast, undisclosed web of 78 subsidiaries and branches in 15 offshore tax havens which may be used to minimize foreign taxes where it has retail operations and to avoid U.S. taxes on those foreign earnings, said Americans for Tax Fairness.
Although the report was not intended to support territorial taxes by the U.S. government, Americans for Tax Fairness shows Wal-Mart has gone to great lengths to avoid the U.S. 35 percent corporate tax.
Mike Duke, Wal-Mart CEO, has told a Senate committee that the United States should lower the corporate tax rate and move to what he calls a territorial system.
The United States now stands nearly alone with its citizenship-based taxation. U.S. citizens, permanent residents and some others must file tax returns with the U.S. Internal Revenue Service and report income from anywhere in the world even if they live overseas.
This has created the extensive bureaucracy, including bank account reports, that U.S. citizens encounter in their daily lives overseas.
Wal-Mart currently has 22 shell companies with addresses in Luxembourg, a country where it does not have a single store, said the report.
“Wal-Mart has transferred ownership of more than $45 billion in assets to Luxembourg subsidiaries since 2011, and reported paying less than 1 percent in tax to Luxembourg on $1.3 billion in profits from 2010 through 2013,” said the report, adding:
“The Wal-Mart Web report is being released as Congress and the Obama Administration consider whether any form of corporate tax reform can be crafted and voted on this year.
“A central part of that discussion is how to tax the $2.1 trillion in offshore profits that are held by U.S. corporations and are currently untaxed here at home. The conventional wisdom in Washington is that corporations should be able to bring these profits home at a steeply discounted tax rate, and the revenue would be used to rebuild roads and bridges.
“This would result in a huge tax break for multinational corporations that have already dodged paying their fair share of taxes, many through the use of offshore tax havens.”
Two organizations that promote the interest of U.S. expats also are lobbying for a territorial or geographic U.S. tax policy. They are American Citizens Abroad and the Association of Americans Resident Overseas.
Members of the latter organization recently told the U.S. Senate Finance Committee that a change in the law would alleviate the reporting burden, raise compliance, and make Americans less undesirable as banking customers, business leaders and joint account holders.
Meanwhile, the Americans for Tax Fairness that was released Wednesday is being distributed all over the world, and other governments might be motivated to look into Wal-Mart’s tax avoidance methods.