The_Open_Door_deel1

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which was approved by President Tubman on December 27, 1951. It
provided for a 17 year "tax holiday", provided that within seven
years from the effective date of the amendment the company would
have planted and would have under cultivation a minimum tract
area of 25,000 acres devoted to cocoa, coffee, and other
agricultural products. At the same time it was agreed that after
the period of tax-exemption no tax was to exceed 13? in any one
year during the remaining years of the concession agreement (as
mentioned in Chapter 3 in the same year an income tax had been
introduced in the country). A third change legalized by this
Amendment was that, upon condition of organizing the parent company
of the Liberia Company under the laws of the Republic of Liberia,
the two companies, the holding company and its subsidiary, upon
expiration of the tax exemption period, would be treated as one
unit for tax purposes, whereby no dividends or other payments or
transfers made by one corporation to the other would be subject to
any tax, assessment, or withholding of any kind or character.
Despite the company's failure to achieve the planting of 25,000
acres with cocoa, coffee, oil palm, rubber, or other commercial
crops it remained entitled to the twelve years of tax exemption,
originally agreed upon, which period expired on December 22, 1961.
This necessitated new legislative activities as the Government
owned 25? of the common stock of The Liberia Company, which
entitled it to 25? of the net profits of the company. Another 10?
was owned by the Liberian Educational Foundation entitling it to
a corresponding share of net income. The remaining 65? of net
profits could be taxed at a rate of 45? leaving only 35,75? of net
profits with the company. The latter therefore entered into a tax
agreement with the government (in December 1962) whereby the
maximum tax rate was set at 40?, to be levied upon the recipients
of the dividends distributed by the Liberian Development
Corporation out of net income realized from sources within Liberia
on or after January 1, 1963. Also if dividends paid would be less
than net income, a tax would be payable by the Liberian Development
Corporation being the difference between the withholding taxes and
of net income.
No term was set for this maximum rate of income tax, and
apparently the Government has committed itself for the rest of the
life of the agreement. Additional taxes were thus lost for a
period of over 50 years.
By separate agreement the Government agreed to sell, and the
Liberian Development Corporation agreed to buy as of December 31,
1962 the Government's 25? stock interest in The Liberia Company,
which had a face value of $ 250,000, for the amount of $ 312,500.
Trimble, Vice-President and General Manager of The Liberia
Company had proposed to the Liberian Government, which was
represented by the Under-Secretary of the Treasury, Lafayette
Morgan, that the parent company, the Liberia Development
Corporation, would buy the Government's share and that the company
would pay a 40? withholding tax on its then 90? of the profits.
The Liberian Government, being advised by the Morgan Law Firm to
accept these proposals, agreed, and the Tax Agreement was signed.
It should be noted that the Under-Secretary of the Treasury and
his brother Lawrence Morgan owned the Morgan Law Firm. If the
Government would have kept its 25? share in the company and would