The_Open_Door_deel1

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question had never been adequately dealt with in 1978 (for a
further discussion of Firestone's Pricing Policy see below).
However, when in the 1960's Firestone used Liberia as as "taxhaven"
the Government successfully claimed an additional
assessment in 1969 whereas a further assessment was made against
the Firestone Plantations Company in 1972. The following
discussion of the dispute that arose from the 1969 assessment
merely serves as a case-study showing some of the most striking
features of the problems that may result from the operations of a
large and multinational company in an underdeveloped country.
During the fiscal year 1954/1955 the Firestone Plantations Company
had made a loan of $ 5,000,000 to the Compania Anonima Firestone
Venezolana and in 1957/1958 another loan of $ 1,612,962 to the
Firestone Tire & Rubber Company of the Philippines (all companies
being wholly-owned subsidiaries of the Firestone Tire & Rubber
Company of Akron, Ohio, U.S.A.).
These loans were evidenced by written debentures and were
guaranteed as to principal and interest by the parent company in
1960. The loans were made from funds of the Firestone Plantations
Company - retained earnings - which, however, were maintained and
controlled in Ohio. Both loans were repaid in 1963/64-.
When during the tax years in question, 1954/55 to 1963/64- and
1957/58 to 1963/64 respectively, the Firestone Plantations Company
received interest on the Venezuelan and Philippine debenture loans
the former did not include the debenture interest in its taxable
income when filing Liberian income tax returns in each of these
years. The Firestone Plantations Company was later to defend its
decision on the grounds that this income was not income derived
from its plantation operations in Liberia as defined in its
agreements with the Government of Liberia and hence was not
taxable, and "in any event, it was derived from sources outside
Liberia and hence was expressly excluded from Liberian Income
Tax," (61) Furthermore, the company's lawyers added, this action
was consistent with a precedent set by the Liberian Treasury
Department for the year 1950 (" the old Bank of Monrovia case")
(62) whereas the exclusion of such debenture interest had been
allowed by the Bureau of Internal Revenues of the Treasury
Department in its audit of the company's return for the tax year
1954-/55-
In (February) 1963 the Bureau of Internal Revenues initiated an
examination of the Firestone Plantations Company's books though it
had to make (repeated) requests to the Firestone & Rubber Company
in Akron, Ohio, for the submission of relevant information.
A substantial part of the information concerning the Firestone
Plantations Company's operations was ( and still is) not kept in
Liberia. Even at the time of the final additional assessment - in
1971/72 - the Income Tax department complained that some of their
requests still had not been met and that the Government lacked the
information which had been withheld by the parent company's
managers who, however, by now (1972) claimed that "Insofar as the