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Fiji Water And Fijian Government Standoff Over Tax

by Mary Swire, Tax-News.com, Hong Kong

02 December 2010


Fiji Water, supplier of the artisanal water favored by celebrities across the globe, has announced that it has shut down its operations in Fiji because of what the company calls “discriminatory” tax hikes in the remote South Pacific country.

Last week, Fiji’s government raised the tax rate on companies extracting more than 920,000 gallons of water per month from one-third of 1% to 15%. Unsurprisingly Fiji Water is the only company that meets that description, and the bottler says this has forced it to pull out of the country entirely. The news came after weeks of rising tensions between the American-owned company and the military-appointed government of the island.

President of Fiji Water, John Cochran, said in a strongly worded statement: “This new tax is untenable and, as a consequence, Fiji Water is left with no choice but to close our facility in Fiji. We are saddened that we have been forced to make a business decision that will result in hardship to hundreds of Fijians who will now be without work."

“As a leading exporter, Fiji Water has contributed greatly to the Fijian economy. We represent more than FD130m in export revenue for the country and employ nearly 400 Fijians at our facility. Our investment in Fiji has created millions of dollars in value through direct employment and with our supplier network. We currently pay millions of dollars in duties and income tax to the government. We also contribute over FD1.8m annually in royalty payments to the Yaqara Pastoral Company Limited and another FD250,000 annually to a trust that supports the six local villages surrounding our facility."

“We consider the government’s current action as a taking of our business, and one that sends a clear and unmistakable message to businesses operating in Fiji or looking to invest there. The country is increasingly unstable, and is becoming a very risky place in which to invest”.

Reacting to Fiji Water's statement yesterday, Commodore Voreqe Bainimarama, the country’s self-appointed interim Prime Minister, told the Fiji Times: “The Fiji Government remains firmly committed to both international and local investment in Fiji. However, if Fiji Water no longer wants to operate in Fiji, it must inform the Director of Lands and Yaqara Pastoral Company Limited from whom Fiji Water has leased lands”.

“As usual Fiji Water has adopted tactics that demonstrate that Fiji Water 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”.

Fiji Water has kept the doors open for a possible reconciliation.

TAGS: tax | business | Fiji

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