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

The Puerto Rico unit of Wal-Mart Stores Inc. has 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% from 2% the tax on goods imported from offshore affiliates to local companies with gross revenues of more than $2.75 billion (Dh 10.1 billion). The increase comes as the U.S. commonwealth struggles to restructure $70 billion (Dh 25.71 billion) in debt, which is 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. 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. (Bloomberg/Andrew Harris)