The Walmart octopus: World's biggest corporation dodges its massive US tax bill with secret overseas havens

A groundbreaking report reveals that Walmart has built a vast, undisclosed network of 78 subsidiaries and branches in 15 overseas tax havens, which may be used to minimize foreign taxes where it has retail operations and to avoid U.S. tax on those foreign earnings. These secretive subsidiaries have never been subject to public scrutiny before. They have remained largely invisible, in part because Walmart fails to list them in its annual 10-K filings with the U.S. Securities and Exchange Commission (SEC). Walmart's preferred tax haven is Luxembourg, dubbed a "magical fairyland" for corporations looking to shelter profits from taxation.

The report, , is the first-ever comprehensive documentation of the company's use of tax havens. The full report is available here, and for the report's Key Findings, click here.

Key Findings

Most people know that Walmart is the world's biggest corporation. Virtually no one knows that Walmart has an extensive and secretive web of subsidiaries located in countries widely known as tax havens. Typically, the primary purpose for a corporation to set up subsidiaries in tax havens where it has little to no business operations and few, if any, employees is to pay little, if any, taxes and to maintain financial secrecy.

Walmart has established a vast and relatively new web of subsidiaries in tax havens, while avoiding public disclosure of these subsidiaries.

All told it has 78 subsidiaries and branches in 15 offshore tax havens, none of them publicly reported before. They have remained invisible to experts on corporate tax avoidance in part because of the way Walmart has filed information about them to the U.S. Securities and Exchange Commission (SEC). Walmart may be skirting the law as there is a legal requirement to list subsidiaries that account for greater than 10 percent of assets or income.
Luxembourg, dubbed a "magical fairyland" by one tax expert because of its ability to shelter profits from taxation, has become Walmart's tax haven of choice.

It has 22 shell companies there - 20 established since 2009 and five in 2015 alone. Walmart does not have one store there. Walmart has transferred ownership of more than $45 billion in assets to Luxembourg subsidiaries since 2011. It reported paying less than 1 percent in tax to Luxembourg on $1.3 billion in profits from 2010 through 2013.

Walmart has made tax havens central to its growing International division, which accounts for about one-third of the company's annual profits.

At least 25 out of 27 (and perhaps all) of Walmart's foreign operating companies (in the U.K. Brazil, Japan, China and more) are owned by subsidiaries in tax havens. All of these companies have retail stores and many employees. Walmart owns at least $76 billion in assets through shell companies domiciled in the tax havens of Luxembourg ($64.2 billion) and the Netherlands ($12.4 billion) - that's 90 percent of the assets in Walmart's International division ($85 billion) or 37 percent of its total assets ($205 billion).

There is evidence that Walmart uses its subsidiaries in tax havens to pursue well-known international tax-avoidance strategies:

• In 2014, Walmart's tax-haven subsidiaries provided U.S. affiliates access to $2.4 billion in foreign earnings - in the form of low-interest, short-term loans - which may transgress U.S. law.
• Walmart generates about $1.5 billion worth of tax deductions in Luxembourg each year by making phantom interest payments to its U.S. global parent. It uses a "hybrid loan," which makes this income disappear for tax purposes here and in Luxembourg.
• Walmart's use of inter-company debt permits it to avoid taxes overseas. It strips earnings out of higher-tax countries by taking out inter-company loans and pays interest to itself in tax havens where the interest income is taxed lightly or not at all.

Walmart appears to be playing a long game - from tax deferral to profit windfall.

It is using tax-haven subsidiaries to minimize foreign taxes where it has retail operations and to avoid U.S. tax on those foreign earnings. Walmart apparently hopes the U.S. Congress will reward its use of tax havens by enacting legislation that would allow U.S.-based multinationals to pay little U.S. tax when repatriating current low-taxed foreign earnings (such as to fund infrastructure spending) and pay no tax with the adoption of a territorial tax system.

U.S. and foreign authorities should investigate Walmart's tax avoidance.

Among the issues to pursue:

1. The U.S. Securities and Exchange Commission should ask Walmart to explain its failure to disclose on Exhibit 21 of its SEC Form 10-K any of the 78 subsidiaries and branches Walmart has in tax havens. As a remedy for that failure, the SEC should also require the company to make public a complete list of its business entities and which of those subsidiaries Walmart has elected to designate as disregarded for U.S. tax purposes, so that investors can better evaluate the company's tax practices.
2. The Internal Revenue Service should 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 IRS should also analyze Walmart's use of short-term offshore loans to fund some of its U.S. operations without paying repatriation taxes and its deposit of offshore cash in U.S. financial institutions to determine whether Walmart has been improperly avoiding U.S. tax.
3. The European Commission should determine whether Luxembourg has been providing Walmart with sweetheart tax deals equivalent to illegal state aid.

Download the full report here.

Download the key findings here.

Read the press release here.

Download shareable graphics here.

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Watching those cat videos is actually good for you!

A new study finds watching cute cat videos may actually be good for you.

Indiana University researchers discovered the Internet phenomenon of watching cat videos, from Lil Bub to Grumpy Cat, does more than simply entertain; it boosts viewers' energy and positive emotions and decreases negative feelings.

Assistant professor Jessica Gall Myrick, Ph.D., surveyed almost 7,000 people about their viewing of cat videos and how it affects their moods.

"Some people may think watching online cat videos isn't a serious enough topic for academic research, but the fact is that it's one of the most popular uses of the Internet today," Myrick said.

"If we want to better understand the effects the Internet may have on us as individuals and on society, then researchers can't ignore Internet cats anymore.

"We all have watched a cat video online, but there is really little empirical work done on why so many of us do this, or what effects it might have on us," added Myrick, who owns a pug but no cats.

"As a media researcher and online cat video viewer, I felt compelled to gather some data about this pop culture phenomenon."

Internet data show there were more than two million cat videos posted on YouTube in 2014, with almost 26 billion views. Cat videos had more views per video than any other category of YouTube content.

In Myrick's study, the most popular sites for viewing cat videos were Facebook, YouTube, Buzzfeed, and I Can Has Cheezburger.

Among the possible effects Myrick hoped to explore: Does viewing cat videos online have the same kind of positive impact as pet therapy? And do some viewers actually feel worse after watching cat videos because they feel guilty for putting off tasks they need to tackle?

Of the participants in the study, about 36 percent described themselves as a "cat person," while about 60 percent said they liked both cats and dogs.

Participants in Myrick's study reported:

• they were more energetic and felt more positive after watching cat-related online media than before;
• they had fewer negative emotions, such as anxiety, annoyance, and sadness, after watching cat-related online media than before;
• they often view Internet cats at work or during studying;
• the pleasure they got from watching cat videos outweighed any guilt they felt about procrastinating;
• cat owners and people with certain personality traits, such as agreeableness and shyness, were more likely to watch cat videos;
• about 25 percent of the cat videos they watched were ones they sought out; the rest were ones they happened upon;
• they were familiar with many so-called "celebrity cats," such as Nala Cat and Henri, Le Chat Noir.

Overall, the response to watching cat videos was largely positive.

"Even if they are watching cat videos on YouTube to procrastinate or while they should be working, the emotional pay-off may actually help people take on tough tasks afterward," Myrick said. The results also suggest that future work could explore how online cat videos might be used as a form of low-cost pet therapy, she said.

For each participant who took the survey, Myrick donated 10 cents to Lil Bub's foundation, raising almost $700. The foundation, Lil Bub's Big Fund for the ASPCA, has raised more than $100,000 for needy animals.

The study has been published in the journal .

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Women under chronic stress have significantly lower levels of klotho, a hormone that regulates aging and enhances cognition

© Unbekannt

Women under chronic stress have significantly lower levels of klotho, a hormone that regulates aging and enhances cognition, researchers at UC San Francisco have found in a study comparing mothers of children on the autism spectrum to low-stress controls.

The researchers found that the women in their study with clinically significant depressive symptoms had even lower levels of klotho in their blood than those who were under stress but not experiencing such symptoms.

The study, published June 16, in , is the first to show a relationship between psychological influences and klotho, which performs a wide variety of functions in the body.

"Our findings suggest that klotho, which we now know is very important to health, could be a link between chronic stress and premature disease and death," said lead author, Aric Prather, PhD, an assistant professor of psychiatry at UCSF. "Since our study is observational, we cannot say that chronic stress directly caused lower klotho levels, but the new connection opens avenues of research that converge upon aging, mental health, and age-related diseases."

Scientists know from their work in mice and worms that, when klotho is disrupted, it promotes symptoms of aging, such as hardening of the arteries and the loss of muscle and bone, and when klotho is made more abundant, the animals live longer.

In previous work, senior author Dena Dubal, MD, PhD, showed that a genetic variant carried by one in five people is associated with having more klotho in the bloodstream, better cognitive function and a larger region of the prefrontal cortex. Carriers also tend to live longer and have lower rates of age-related disease. Dubal and colleagues found that increasing klotho in mice boosted their cognition and increased resilience to Alzheimer-related toxins, suggesting a therapeutic role for klotho in the brain.

The current study included 90 high-stress caregivers and 88 low-stress controls, most of whom were in their 30s and 40s and otherwise healthy. Klotho is known to decline with age, but in this cross-sectional study of relatively young women, this decline only happened among the high-stress women. The low-stress women did not show a significant reduction in klotho with aging.

"Chronic stress transmits risk for bad health outcomes in aging, including cardiovascular and Alzheimer's disease," said Dubal, an assistant professor in the UCSF Department of Neurology and the David A. Coulter Endowed Chair in Aging and Neurodegenerative Disease. "It will be important to figure out if higher levels of klotho can benefit mind and body health as we age. If so, therapeutics or lifestyle interventions that increase the longevity hormone could have a big impact on people's lives."

The researchers hypothesized that lower levels of klotho could contribute to stress and depression, since klotho acts on a variety of cellular, molecular and neural pathways that link to stress and depression.

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How exercise can be BAD for you: Ultra-marathons and endurance events 'can trigger blood poisoning', scientists warn

Extreme endurance events like ultramarathons and multi-stage marathons can causes intestinal bacteria to leak into the bloodstream, triggering blood poisoning, a study has found

Too much exercise can trigger blood poisoning, scientists have warned.

Taking part in extreme endurance events causes intestinal bacteria to leak into the bloodstream, leading to serious infection, a new study revealed.

Researchers said their findings came after analysing people who participated in fitness events, including ultra-marathons, and multi-stage marathons which span consecutive days.

Dr Ricardo Costa, of the University of Monash, said: 'Blood samples taken before and after the events, compared with a control group, proved that exercise over a prolonged period of time causes the gut wall to change.

'This allows the naturally present bacteria, known as endotoxins, in the gut to leak into the bloodstream.'

This then triggers an inflammatory response throughout the body from it's immune cells, similar to a serious infection, he added.

As part of the study, Dr Costa and his team examined people taking part in a 24-hour ultra-marathon and multi-stage ultra-marathons.

These are events in which people run for longer than the standard 26 miles (42km), and often run for long distances on consecutive days.

'Nearly all of the participants in our study had blood markers identical to patients admitted to hospital with blood poisoning,' Dr Costa said.

'That's because the bacterial endotoxins that leach into the blood as a result of extreme exercise, triggers the body's immune cells into action.'

And they found that it is people who jump into endurance events with little preparation that are most at risk.

They discovered fit and healthy individuals who follow a steady training program to build up to extreme endurance events develop immune mechanisms to counteract the body's inflammatory reaction, without any side effects.

This meant they were protected against developing blood poisoning.

But those who were unfit and who carried out little training put their bodies under enormous strain, above the immune system's protective capacity.

With elevated levels of endotoxins in the blood, the immune response can be far greater than the body's protective counter action, Dr Costa said.

In extreme cases, it leads to sepsis induced systemic inflammatory response syndrome, a condition which can be fatal if it is not diagnosed and treated promptly.

The study is the first to identify a link between extreme endurance exercise and the stress it may place on the gut.

Dr Costa said anything over four hours of exercise and repetitive days of endurance exercise is considered extreme.

'Exercising in this way is no longer unusual - waiting lists for marathons, Ironman triathlon events and ultra-marathons are the norm and they're growing in popularity,' he said.

'It's crucial that anyone who signs up to an event, gets a health check first and builds a slow and steady training program, rather than jumping straight into a marathon, for example, with only a month's training,' he added.

People following a steady programme are less likely to develop blood poisoning as their bodies are able to counteract the negative reaction. But those who have done little training are at risk, experts warned

The research team found that people who were fitter and trained over a longer period of time leading into the ultra-marathon event had higher levels of Interleukin 10 - an anti-inflammatory agent - which allowed them to dampen down the immune response which caused the negative health impacts.

'The body has the ability to adapt and put a brake on negative immune responses triggered by extreme endurance events.

'But if you haven't done the training and you're unfit - these are the people who can get into trouble,' Dr Costa said.

Next, Dr Costa and his team want to investigate to what degree exercise, with and without heat, impacts the gut's function.

They will also investigate and develop strategies for individuals to prevent and manage damage to the gut caused by stress from heat and exercise.

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Putin aide: Russia has no plans to enter arms race

© RIA Novosti/Ramil Sitdikov
A Topol-M intercontinental ballistic missile

A Russian presidential aide has told reporters that Russia has no plans to launch a new arms race, but will nevertheless react to all new threats.

"Russia is trying to react to new threats, nothing more than this. We are not entering an arms race, we are against any arms race as it would weaken our opportunities in the economic sphere," Yuri Ushakov was quoted as saying by RIA Novosti.

"We are in general against this," he said. "I think that our president has made very precise statements on this matter."

Ushakov's comments came soon after President Vladimir Putin told Russia's top brass that military forces will get 40 new nuclear-capable intercontinental ballistic missiles in 2015. The president noted in his speech that the new missiles "will be capable of penetrating the most modern defenses" and promised that the Russian government would persist in paying specific attention to realization of a massive military rearmament program.

Putin's words caused a wave of heated reactions in the West. NATO Secretary-General Jens Stoltenberg called the statement "unjustified, destabilizing and dangerous," adding that this would cause the alliance to increase the readiness and the preparedness of its forces. US Secretary of State John Kerry said that Russia's plans to purchase more missiles were causing concern and could be a sign of reversal in the disarmament sphere.

However an unnamed military source has told the Interfax news agency that even after all 40 missiles Putin spoke about are delivered to troops, Russia would still remain within the limits imposed by the active international arms treaties. The source added that the country would stick to the agreed schedule of rearmament because it was based on industry capabilities and gradual wearing out of various weapons' components.

President Vladimir Putin and other top Russian officials have repeatedly spoken against the possible dragging of the country into a new arms race, but emphasized that the country would find a reply to every new move by its opponents.

When Putin spoke to the staff of an Air Force base in South Russia in 2014, he said that it was of primary importance to look into the future and respond in a timely manner to all changes in the global military situation.

Before that, Putin urged the international community to agree on legally-binding guarantees that new weapons, such as the global missile defense constructed by the US and NATO, would not be directed against Russia. "Statements like 'Don't be afraid' and 'We promise that nothing will happen' are clearly insufficient in the modern world," Putin told reporters. "This is childish. We need guarantees and serious agreements in the security sphere."

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Boeing 737 bursts into flames at Kazakhstan airport

Terror at the terminal: Horrified airline passengers look on from the gate after the plane they were due to board bursts into flames at at an airport in Kazakhstan

This is the terrifying moment a commercial airliner bursts into flames moments before passengers were about to board.

The Boeing 737-300 caught fire after an oxygen cylinder exploded as horrified onlookers watched on from the gate.

Dramatic footage shows 15ft-high flames erupting through a massive hole in the fuselage, sending thick, black smoke billowing across the airport.

Fortunately, the incoming passengers had already left the 25-year-old aircraft and the outgoing ones had not yet been called to board.

The fire is understood to have caused irreparable damage before firefighters were able to bring the flames under control with water cannon.

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Destroyed: Dramatic footage shows 15ft-high flames erupting through a massive hole in the fuselage, sending thick, black smoke billowing across the airport as firefighters battle to control the blaze

SCAT airlines has a terrible safety record and was earlier this year ranked among the most dangerous carriers in the world.

The company was given a safety rating of just one star out of seven, putting it among the bottom in a report by Australian review site AirlineRatings.com which was published in January.

In January 2013, all 21 people on board a SCAT Airlines flight from Kokshetau to Almaty died when the aircraft crashed in poor weather near Kyzyltu.

All five of the most dangerous airlines listed are banned in the European Union Member States and 'strongly advised against' in the United States.

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Britain braced for "serious economic risk" if Greece leaves Eurozone

© Reuters/Andy Rain
British Chancellor of the Exchequer George Osborne

Prime Minister David Cameron's spokeswoman has announced the UK is "stepping up" preparations for the "serious economic risk" which would ensue should Greece opt to leave the Eurozone.

Her remarks come as Cameron meets with the leaders of Italy and Luxembourg on Wednesday to discuss the Greek financial crisis.

Government officials held contingency planning talks in February to evaluate the possible implications of a Grexit, but they have since stepped up their preparations following revelations that Greece could default on its debts.

Cameron's spokeswoman said Chancellor George Osborne had discussed the matter in the House of Commons on Tuesday, adding the authorities were taking "all steps to protect ourselves from such eventualities."

"We are continuing to make sure we have the right plans in place and stepping up operations given where discussions have got to. We don't go into the specifics of these plans but of course they will be looking at how we make sure we have looked at the impacts on business, the banks and the financial sector and tourists," she said.

"This is about making sure we are as prepared as we can be. Of course, the potential default does present some serious economic risks, so alongside contingency plans it is about making sure we have an economy that is growing and that our public finances are in good order," she said.

Finance ministers from Eurozone countries will discuss the crisis on Thursday, but it is not expected a landmark decision will be made.

Greek Prime Minister Alexis Tsipras criticized the demands made by Athens' creditors on Tuesday, accusing the International Monetary Fund (IMF) of having "criminal responsibility" for the Greek economic crisis.

The government contingency plans involve procedures to prevent a run on the banks if Greece looks likely to default on its debts, including limiting bank withdrawals and focusing on the implications for British tourists in the country.

They are also reportedly examining the longer-term implications on the British banking system and the potential instability caused by a debt default.

If Greece is to avoid a default, it must reach an agreement with its creditors before its current bailout plan expires on June 30.

If it cannot reach an agreement, the Syriza government will be unable to access the €7.2 billion in loans which are currently frozen due to the country's inability to decide on pension reforms and tax rates.

On Wednesday, the European Central Bank (ECB) will decide whether to continue providing Greece with emergency liquidity funds which allows banks to continue working.

The ECB has loaned the country approximately €82 billion.

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