Wednesday, October 04, 2006

U.S Embassy tax refund: Double Dipping or Backdoor Financing?

Senator Buaserau scrutinizes the need for a decree for V.A.T(Value Add Tax) reimbursement for the construction of the new U.S Embassy in Suva, Fiji.

These are excerpts from Fiji Times article written by Frederica Elbourne.

During debate on the Bill in the Upper House, Senator Ratu Solomoni questioned the wisdom of the Bill and said he was amazed that it came at a time when the nation was faced with a 30 per cent fuel surcharge, rising interest rates, poverty, high debt and economic woes.

He challenged Ratu Jone and Foreign Affairs minister Senator Kaliopate Tavola to prove if an official request came from the Government of the United States of America seeking a concession. The Bill allows VAT refund to embassies and high commissions who want to build their offices here, following a request from the US embassy.

"I hope the letter did not just originate from the US embassy here in Suva. It is important to verify this. If it is coming from the USA, then Fiji can use this precedent for its future negotiations,"he said.


The Senator's comments were refreshing because they were intelligent questions and were not the usual echo chamber speeches which the public expects from Government appointed Senators.
The honorable Senator also posed an interesting question, on why the Minister of Finance is tabling a decree for matters which lies within the jurisdiction of the Ministry of Foreign Affairs.

"Thus the amendment should be legally and correctly introduced by the Minister for Foreign Affairs and External Trade with the concurrence of the Minister for Finance and National Planning,"he said yesterday.


The U.S State Department website has vast resources, like this document on Capital Construction and Major Rehabilitation projects (PDF)overseas. Tax reimbursements for foreign taxes should come under bilateral agreements and not decrees by one party.

[Source: U.S State Department publication: Foreign Affairs Manual & Foreign Affairs Handbook.]

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