Wal-Mart sues Puerto Rico over ‘astonishing’ tax increases

Washington: 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 per cent from 2 per cent the tax on goods imported from offshore affiliates to local companies with gross revenues of more than $2.75 billion (Dh10.09 billion).

The increase comes as the US commonwealth struggles to restructure $70 billion (Dh257.1 billion) in debt, more than every US state but New York and California. This week, the US. 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 per cent 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 US 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, US District Court, District of Puerto Rico (San Juan).