The_Open_Door_deel1

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income would Le taxable, liability for the tax years as to
which returns were filed more than seven years prior to
assessment is Larred by section 165 of the Internal Revenue
Code." (63), and thus wanted to exclude the years 1955/56 to
1960/61 from the assessment.
The Government of Liberia based its opinion and assessment on
the "New" Bank of Monrovia case (1967) in which the highest
official of the Treasury Department - the Secretary of
Treasury - formally rejected the exact same contention as was
made by Firestone-Liberia, and accused the Firestone Plantations
Company of impeding the progress of the audit as, in
spite of repeated demands, Firestone-Liberia had not adequately
disclosed certain information when requested by the Income
Tax Division of the Ministry of Finance (then still called
Treasury Department) (64). It is significant to note here
again that the Liberian Government felt that it was powerless
against this abuse of privileges by Firestone as it did not
have any sanctions under the existing Agreement with the
company. The attempts by the Firestone Tire & Rubber Company
to use Liberia as a tax-haven and to make use of loopholes in
the tax legislation are clear: upon declaration of dividends
by the Firestone Plantations Company the parent company was
liable to pay additional taxes in the U.S.A. as the applicable
Liberian Income Tax rates were lower than those in the U.S.A.
Therefore, it was profitable to transfer income from Liberia
to the U.S.A. as "retained earnings" or as loans since these
could not be taxed. However, officially it had been agreed
that the surplus account of Firestone-Liberia (the retained
earnings of the company was in fact a capital account of that
company and was to be utilised in providing working capital
for conducting day to day operations and business of Firestone-
Liberia in Liberia (65).
In case the U.S. parent company had financed the loans to its
subsidiaries in Venezuela and the Philippines from its own,
U.S., sources it would have had to pay U.S. income tax upon
receipt of the interest. This multinational, or transnational,
company with over 50 subsidiaries and over 100 sales offices
all over the world resorted to the procedure discussed above,
and only guaranteed these loans though the decision to lend
"these funds had been made exclusively by the top of Firestone
in the U.S.A. whereas the company's employees in Liberia had
not been involved in the details of drafting documents, handling
funds, collecting interest, etc.
The amount of this additional assessment of income taxes -
$ 441,645 plus statutory interest thereon to the amount of
$ 228,371 - which was gained by the Government was relatively
small but not negligable. The Government claimed from the
Firestone Plantations Company 3 3,162,500 plus statutory interest
of $ 2,013,500 in a further (protective) assessment
made in May 1972 (in respect of the same taxable years as above)
(66). The major issue was again related to intercompany transactions
between the Firestone Plantations Company and its foreign
affiliates. The Liberian subsidiary had carried forward
its books an interest-free loan due from its U.S. parent which