Wal-Mart Puerto Rico has won its legal battle against the Commonwealth of Puerto Rico over new tax laws that the retail giant claims are both discriminatory on their part and unlawful under federal laws.

In his 109-page ruling, Federal Judge Jose Antonio Fuste sided with Wal-Mart, declaring the new tax that the Puerto Rican government imposed on the American retail chain is invalid.

Given the financial crisis that Puerto Rico is faced with, Fuste said that he finds no pleasure in his decision that would deny the commonwealth a potential source of additional revenue. But, he also argued that the economic condition should not be a justification for the government to collect new taxes unlawfully.

Over the past several years, Puerto Rico has an accumulated debt totaling more than $70 billion and is bound to undergo restructuring.

Under the new tax law, Wal-Mart PR said that they will be forced to pay about 300 percent of the tax rate that they pay on the average worldwide. This would effectively take away over 90 percent of the company's net income, making it one of the most burdensome taxes in the world today.

Puerto Rican Government Says It Will Appeal the Verdict

"The judge just took away $100 million from the people of Puerto Rico and gave it to Walmart," said Gov. Alejandro Garcia Padilla. "Now I have to look for that money somewhere else. Of course I'm going to appeal the decision, and immediately."

According to Puerto Rico's treasury secretary Juan Zaragoza, they will also appeal the decision of the federal judge because they think that a federal court has no power to preside over the case because it has no jurisdiction, in the first place.

"We will raise on appeal all the procedural errors that, in our opinion, took place during the trial," he said in a statement.

Wal-Mart Claims That The New Tax is Discriminatory and Unlawful

Wal-Mart had two main arguments and the federal judge had to agree. First, the new tax rate applies to companies in Puerto Rico with over $2.75 billion in revenue. This would, basically, single out Wal-Mart as it is the only company that qualifies in the bracket.

Walmart also argued that the crippling tax on them was also designed for the company to shoulder the tax reduction from other businesses. The judge agreed that this violates Wal-Mart's rights under the Equal Protection Clause of the U.S. Constitution.

"Today's ruling is a victory not only for Walmart Puerto Rico but also for our customers, our more than 14,000 Puerto Rican associates, and the many Puerto Rican suppliers and farmers who depend so heavily on us," said Wal-Mart spokesperson Lorenzo Lopez.

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