Wal-Mart Sues Puerto Rico Over ‘Astonishing’ Tax Increases

  • Island's biggest employer files suit in San Juan federal court
  • Legal challenge comes as Puerto Rico copes with debt payments

The Puerto Rico unit of Wal-Mart Stores Inc. sued the island’s government, seeking to overturn a new tax the retailer calls unfairly high.

Enacted in May, Puerto Rico’s Act 72-2015 increases to 6.5 percent from 2 percent the tax on goods imported from offshore affiliates to local companies with gross revenues of more than $2.75 billion.

The increase comes as the U.S. commonwealth struggles to restructure $70 billion in debt, more than every U.S. state but New York and California. This week, the U.S. Supreme Court agreed to consider reinstating a law that would let Puerto Rico’s debt-ridden public utilities restructure their obligations.

The new levy raised the estimated cumulative income tax on Wal-Mart Puerto Rico Inc. “to an astonishing and unsustainable 91.5% of its net income,” according to the company’s complaint, filed in federal court in San Juan Friday.

Bentonville, Arkansas-based Wal-Mart, the largest U.S. retailer, is Puerto Rico’s biggest private employer and hands over more sales tax to the island government than any other business, according to its lawyers. They’re asking a federal judge to declare the new measure unconstitutional and block its enforcement.

The case is Wal-Mart Puerto Rico Inc. v. Zaragoza-Gomez, 15-cv-3018, U.S. District Court, District of Puerto Rico (San Juan).

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