As Fiji Water restarts operations in Fiji today, the questions that arose in relation to transfer pricing and other issues in relation to the true declaration of the value of a carton of Fiji Water exported to the US are yet to be dealt with.
Prime Minister, Commodore Voreqe Bainimarama has said that despite being a premium boutique water product, Fiji Water declares the selling price of a carton of water at $US4 while exporting it from here when at the same time other relatively unknown brands from Fiji like Aqua Pacific declare their selling price to the US market at $US10 a carton.
Commodore Bainimarama said Fiji Water sells its water to a US sister company and therefore is engaged in transfer pricing.
It has also been confirmed that a bottle of Fiji Water is sold as high as $7US in America, and this has resulted in the government questioning the declaration of a carton of Fiji Water at $4US to the Fiji Islands Revenue and Customs Authority.
So the question remains on what is the true value of a bottle of Fiji Water when it leaves our shores to the US.
FIRCA CEO, Jitoko Tikolevu said he will not make any comments on the issue at this stage.
Commodore Bainimarama also clarifies that Fiji Water has had a corporate tax holiday since its inception in 1996 until only two years ago and it has paid less than a million dollars in total corporate tax.
He said it is about time that Fiji Water pays a reasonable Water Resource Tax for extracting the natural water from Ra as it is reaping huge benefits from the sale of the product.
This will now see Fiji Water paying 15 cents or about 8 cents US a litre in Water Resource Tax since they extract more than 3.5 million litres of water in a month.
They currently pay one third of a cent for every litre of water extracted.
The actual amount of water extracted by the US company is not known at this stage.
According to the Mother Jones news website based in the US, Fiji Water's Vice President of Corporate Communications told them the estimate of 180 million bottles sold in 2006, given in a legal declaration by his boss, was wrong, but declined to provide a more solid number.
Fijivillage has asked Fiji Water what is the total number of bottles of Fiji Water that are sold in a year based on this figure of 180 million bottles.
We have also asked if the company in Fiji only exports to its sister company in the US, and whether all Fiji Water exports to about 40 countries are done from the US.
Meanwhile Commodore Bainimarama also confirmed that in a meeting with the Fiji Water lawyers yesterday, he also raised concern on misleading statements by the company where it talked about instability in Fiji.
He said it is clear they knew it was not true but made the claims because they did not want to pay the new taxes at the time.
Yesterday the government said it was ready to move ahead and call for tenders to take over the land leases that Fiji Water occupies if the company decided to permanently shut down.
Commodore Bainimarama said this needed to be done to ensure that Fiji gets a reasonable return on the resource extracted by the company.
Story by: Vijay Narayan
