The_Open_Door_deel1

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It is significant that despite the fact that nine out of this
group of eleven people objected in some way to the company's proposals
regarding taxation^ the outcome of the negotiations and
the subsequent agreement with BFG bears no evidence of their suggestions.
Ultimately, BFG was granted a tax holiday of 16§ years (starting
on the date it commenced planting), after which, and during a
period of ten (10) years, the company would pay a maximum income
tax of 25? of its net income. No taxes other than income tax would
be levied. On distribution of net income the recipients would be
exempt from all levies, duties or taxes, whether distributed as a
dividend, or otherwise, and whether in cash, securities or
property. In calculating "net income" BFG was awarded rights
similar to those that had been granted to Firestone in relation to
its fixing of a price for its produce. Income derived from sources
outside Liberia was also completely exempt from any and all taxes,
both now and in the future. Other authors (6) have drawn attention
to a double deduction from gross income which is allowed under the
agreement. Nevertheless, no change or amendment to the 1954
Agreement was ever introduced.
As BFG commenced planting on July 1, 1955 its period of income tax
exemption expired on January 1, 1972. After that date, it started
paying income taxes and it will continue to do so until December
31, 1981, at a rate of 25 per cent. Jn the meantime, corporate
income tax was raised in 1977 to 50? (on income exceeding
$ 100,000). High ranking officials within the Ministry of Finance
could not rule out the possibility that BFG would continue to pay
25 per cent income taxes on its net income after 1981. Though in
that year the Government could request a re-negotiation of this
tax provision there would be no contractual obligation for BFG to
respond to such a request (7).
These paradisical tax advantages did not prevent the company from
attempting to evade certain tax provisions. As was stated in the
concession agreement, the purpose of the tax holiday was to
amortize Development Costs incurred during these 16| years, but
BFG did not start the amortization of these costs on the date
planting started, i.e. the effective date of the Agreement, but
only after the plantation had started producing (1962/1963).
However, after pressure from the Government BFG changed its methods.
Under the 1954 Agreement BFG was granted two concession areas of
300,000 acres each,.one being situated in Grand Bassa County, the
other covering parts of Montserrado and Grand Cape Mount counties.
The areas were:
"(a) The lands in Grand Bassa County of the Republic, lying
within twenty (20) miles of either side of the St.
John River and bounded on the south by the Atlantic
Coast line of the RepuLlic and on the. north by the
boundary line of said County" (...)
(b) The lands bounded on the east by the Si. Paul River;
on the west by the. Plorro River; On the. south by a