Essay about Fiji

1709 Words Jan 14th, 2015 7 Pages
By: Susan Martinez

March 1, 2011

Introduction

Relations between the Fijian government and FIJI Water have been tense since early 2008 when the new military government seemed to suddenly notice the huge exporter (accounting for 20% of Fiji’s total exports) (Dornan). Though there are a variety of disputes, I will focus on two in particular

1) The Fijian government’s belief that FIJI Water is engaging in transfer pricing.

2) The Fijian government’s repeated efforts to tax the company.

At this point both sides have lost face in standoffs, and the tension is building.

While the company may not be popular with the national government, FIJI Water is a star in its community. Since opening in
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The government had threatened to take back FIJI Water’s well rights and offer them to an international competitor and FIJI Water folded (Fishman).

FIJI Water’s strong arm response did nothing to curb the rising tension. Threatening to close the plant whenever the government does something the company does not like is a shortsighted and damaging tactic. In response to the standoff, Bainimarama’s commented, "As usual Fiji Water has adopted tactics that demonstrate (it) does not care about Fiji or Fijians. They have made statements about supposed instability in Fiji and know it is not true, yet do so because they simply do not want to pay the new taxes" (Dornan). FIJI Water cannot afford to let this become the popular opinion.

Transfer Prices.

In early 2008, the Fiji Islands Revenue and Customs Authority (FIRCA) blocked exports of FIJI Water for two weeks on the grounds that it was avoiding tax payments using transfer pricing (Dornan). The government believed the company had engaged in the practice of selling its product at lower prices to incur fewer corporate taxes. A press release by FIRCA in January 2008 “noted that FIJI Water had received advice from international law firm Baker & McKenzie, which conducted an economic study on transfer pricing and declared what the company was doing in FIJI was fair.” (McMaster and Nowak). Bainimarama

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