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Fiji
A two-year transfer pricing dispute between the government of Fiji and a U.S. company over the pricing of bottled water extracted from the island has culminated in the government announcing a massive tax hike on extracted water and the company responding by ceasing operations on the island.
The Fiji government announced Nov. 26 that it would impose a F$0.15 ($0.08) per liter tax on bottled water at locations where more than 3.5 million liters per month are extracted.
Los Angeles-based FIJI Water Company LLC reacted to the tax hike by closing its facility on the island, operated by its subsidiary, Natural Waters of Viti Ltd., effective Nov. 29.
The Fiji government in 2006 began to enhance transfer pricing monitoring, and in 2008 became embroiled in a dispute with FIJI Water over the pricing of bottled water supplied by its subsidiary (16 Transfer Pricing Report 669, 1/17/08).
Discriminatory Tax. FIJI Water released a statement Nov. 28 reacting to the tax hike. The company's president, John Cochran, said the...