Published On: Sun, Dec 6th, 2015

Wal-Mart Sues Puerto Rico Over ‘unfairly high’ Tax Increases

Wal-Mart Stores Inc. sued financially ailing Puerto Rico over an increase in an import tax that the retailer said would now take 91 percent of its profits on the island.

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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.

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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