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Fiji

Good Essays

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 …show more content…

This is less than a tenth of the $11.7 million (US) FIJI Water is expected to pay to the Fijian government for taxes in 2011 (Global Voices).

|Year |Projected Exports |Percent Change |
|2008 |$1,202,000,000 |67.04% |
|2009 |$1,202,000,000 |0.0% |
|2010 |$1,202,000,000 |0.0% |

The problem is this: the Fijian subsidiary sells 12 liter cartons to its U.S. parent for $4 US each. The U.S. parent then sells those cartons for $13 US and the cartons retail for around $20 US (Dornan). The Fijian government wants a bigger piece of the $20 retailers pay for a carton, and refused to believe the advice without seeing the company’s financial data itself. Even the current tax of $.08 US per liter of water ($.15F) results in a cost increase of only [$.08 x 12 L] = $.96 US ($1.80F) per carton. If this amount were added to the $4 US selling price, it would still be well below the $10 per carton claimed by competitor Aqua Pacific (Dornan).

Good Neighbors

In a conference on corporate social responsibility in

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