US embassy cable - 00THEHAGUE1878

UNCLAS THE HAGUE 001878 
 
SIPDIS 
 
 
DEPARTMENT FOR S/WCI - SCHEFFER/WARRICK, S/SA -O'BRIEN, DRL 
- KOH/BARKIN, L - MATHESON, L/EUR - LAHNE, INR/WCAD - 
DONAHUE/MORIN, EUR/SCE - COUNTRYMAN 
 
 
E.O. 12958: N/A 
TAGS: PREL, PHUM, BK, HR, SR, NL, ICTY 
SUBJECT: ICTY: REQUEST FOR GUIDANCE ON PROPER DISPOSITION 
OF VAT REFUND 
 
 
REF: 98 THE HAGUE 3665 
 
 
1.  SUMMARY AND ACTION REQUEST:  This is an action request; 
see paragraph five below.  The Finance Section of the 
International Criminal Tribunal for the Former Yugoslavia 
(ICTY) has recently renewed its 1998 request for advice as to 
the proper disposition to be made of a refund (in the amount 
of NLG 190,165) from the Dutch tax authorities of value-added 
tax (VAT) paid on goods and services purchased with USG funds 
and donated to the ICTY.  Embassy requests guidance.  END 
SUMMARY. 
 
 
2.  In 1994, the USG proposed a donation in kind of a 
computer system -- computer hardware and software and all 
necessary support, including installation, maintenance, and 
training -- for the Office of the Prosecutor (OTP) of the 
ICTY.  In 1995, the USG DOJ used a contract with CACI 
International Inc., a U.S. corporation, to purchase computer 
goods and services.  CACI, in turn, subcontracted with Borsu 
Systema, a Dutch corporation, to provide some of those goods 
and services in The Netherlands.  The goods and services were 
then contributed by the USG to the ICTY pursuant to the 1994 
proposal of an in-kind donation of a computer system. 
 
 
3.  Borsu Systema, the aforementioned Dutch subcontractor, 
charged VAT for the goods and services it provided.  As a 
consequence, since 1996, the Embassy has been engaged in 
efforts to recover the VAT paid on those goods and services. 
In 1998, the Finance Section of the ICTY notified the Embassy 
that the Dutch Government had deposited into the ICTY's bank 
account a VAT refund (in the amount of NLG 190,165) for VAT 
that had been paid on goods and services purchased with USG 
funds and donated to the ICTY.  The ICTY asked whether the 
USG agreed to the money being deposited in the ICTY's 
account.  Per reftel, Embassy sought guidance as to whether 
the refunded VAT could be retained by the ICTY.  Embassy also 
requested guidance as to whether there were any legal or 
other constraints that would restrict the purposes for which 
the funds could be used. 
 
 
4.  On 18 May 2000, Embassy received a letter from the 
Finance Section of the ICTY, renewing its request for advice 
as to whether the Tribunal could keep the refunded VAT in the 
amount of NLG 190,165, or whether it must pay it back to the 
USG. 
 
 
5. ACTION REQUEST:  Embassy seeks guidance as to whether the 
refunded VAT may be retained by the ICTY.  If the ICTY may 
retain the funds, please advise whether there are any legal 
or other constraints that would restrict the purposes for 
which the funds could be used.  Finally, if ICTY may not 
retain the funds, please provide instructions for the ICTY to 
transfer the funds back to the USG. 
 
 
6.  A copy of the ICTY letter to the Embassy has been faxed 
to the Department (S/WCI - Warrick). 
SCHNEIDER