In May, Puerto Rico increases taxes to 6.5 percent from 2 percent on goods imported from offshore affiliates to local companies with gross revenues of more than $2.75 billion.
On Friday the Puerto Rico unit of Wal-Mart Stores Inc. sued the island’s government, on what the retailer calls “unfairly high”. Wal-Mart is largest U.S. retailer, and 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.
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Court papers says, according to AP, that the increased levy on purchases from U.S.-based Wal-Mart distribution centers is among the world’s highest taxes and pushes its effective tax rate to 91.5 percent of net income. It adds that the tax increase will cost Wal-Mart $155 million over six years and make its Puerto Rico business unsustainable.
Bloomberg reports that 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.
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