Bananera Noboa Representative Spoke about the IRS Gloss

Today, Fernando Alarcon, legal representative of Exportadora Bananera Noboa, gave a press conference in which he clarified the origin of the costs that the IRS is charging to the exporting company. According to the IRS, Bananera Noboa should cancel 90 million dollars for a gloss of the fiscal year 2005.

Alarcon explained the IRS has made a transfer pricing adjustment using the information from the US Department of Agriculture as database. According to that information each banana crate would cost a dollar.

“To establish the transfer pricing adjustment the IRS decided to compare the banana crate CIF value set for the arrival to a foreign port with the FOB value that is the one that Bananera Noboa uses to sell the fruit, but they used the database of the U.S. Department of Agriculture,” he said.

However, the wholesale market price (Terminal Market), as it appears in the database of the US Department of Agriculture, includes the prices for yellow fruit. Exportadora Bananera Noboa SA exports green fruit not yellow.

“In the price of the yellow fruit there are included the extra following costs more than those of the CIF: boat landing, fruit shipment to the truck that takes it from the port to the ripening rooms, the cost of the ripening rooms, the cost of transportation of the fruit from the ripening rooms to the supermarkets, the costs existing in the banana marketing chain, but that was not taken into account by the IRS and they should do it if they want to reach the CIF or FOB values in order to avoid applying  a price from the wholesale market. That is why this is not comparable or applicable,” he said.

Besides that Alarcon said the SRI charged Bananera Noboa un unreal freight cost (one dollar per crate) which is well below to what is actually used in the market.

Legal agent of Bananera asked the IRS to take into account the recently exposed arguments in the appeal that was presented by the company in May 2010.