Asda has defended royalty payments made to parent Wal-Mart after reports over the weekend highlighted the money transferred to the US retail giant.
The Sunday Times said Asda had paid almost GBP780m (US$1.25bn) to Wal-Mart over the last seven years. It reported the payments reduced Asda’s profits and claimed had cut the UK’s second-largest retailer’s tax bill by nearly GBP250m.
The newspaper said the payments meant Asda had joined the likes of Apple and eBay in having their “avoidance of tax” under scrutiny.
However, an Asda spokesperson told just-food: “I’d like to make it clear that there is no question as to whether Asda is under scrutiny over the avoidance of tax. We are not. We paid GBP163m in corporation tax in 2011 and have paid over GBP886m in the last five years.
“The payment to Walmart of technical assistance and services includes such things as IT services provided to Asda from the Walmart IT team based in Bentonville, Arkansas. This payment is then subject to tax by the US tax authorities. The transfer pricing for those services is agreed between the UK and the US tax authorities, who are happy that our arrangement is fair and legal.”
The spokesperson added: “As I’m sure you are aware, all multi-national groups, regardless of where they are based, are subject to such transfer pricing arrangements.”
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