Puerto Rico Sued by Wal-Mart Over ‘Astonishing and Unsustainable’ Tax Hike

Wal-Mart Puerto Rico, Inc. has filed a lawsuit against the Commonwealth of Puerto Rico over a steep rise in tax.

The Puerto Rico arm of the retailer chain claimed that the island carried out an "onerous and unconstitutional" tax increase, CNN reported. Wal-Mart's estimation raises the company's income tax to "an astonishing and unsustainable 91.5% of its net income," making it one of the highest taxes globally, a PR of the retailer said, as quoted in a Forbes report.

Puerto Rico, which is currently having financial woes, accused Wal-Mart of failing to pay its fair share of taxes, CNN wrote. The island has a more than $70 billion debt that it stated it cannot pay back in full, an amount more than every U.S. state except for New York and California. This week, the U.S. Supreme Court consented to consider reinstating a law that would let Puerto Rico's debt-ridden public utilities restructure their obligations, Bloomberg reported.

In order to raise more money, Puerto Rico enacted the Act 72-2015 in May, which more than doubled the tax on goods that large firms, such as Wal-Mart, bring in from international suppliers, Bloomberg wrote. The tax hike is only applicable to big corporations with gross revenues over $2.75 billion annually.

"No government should be permitted to drive a company -- the largest private employer -- out of business through a special tax applicable at its highest rate only to that company," Wal-Mart stated in the legal complaint that was filed on Friday, Dec. 4, in the federal court of San Juan, as reported by CNN.

Wal-Mart's lawsuit also indicated that Treasury Secretary Juan Zaragoza and other high-ranking government officials falsely accused the retailer of evading taxes by manipulating the prices paid between related units to underreport Puerto Rico's income, Fox News Latino reported.

The lawsuit insisted that the tax breaches interstate commerce and equal protection clauses of the U.S. Constitution and Federal Relations Act. It also asks the court "for swift action because the commonwealth's fiscal crisis may impede its ability to refund tax payments found to be unconstitutional," Fox News Latino wrote.

The tax increase will cost Wal-Mart $155 million over six years and will make its Puerto Rico business unsustainable, the news outlet noted.

Wal-Mart has 55 Walmart Stores, Walmart Supercenters, Sam's Clubs, Super Ahorros, and Amigos stores in Puerto Rico, employing almost 15,000 individuals in the island, Forbes wrote. The company said that it will "reconsider its operations" on Puerto Rico if the situation fails to be addressed, CNN noted.