Ford has saved itself a potential cost of $US13 million a year by taking an administrative district of Kansas City to court.

According to Associated Press (AP), a judge ruled that Ford does not have to pay a business licensing fee for operating its plant in suburban Kansas City.

AP said the Claycomo fee could have cost the car maker an additional $13 million a year in taxes but circuit court judge David Russell ruled this week that Ford is not a merchant and thus under Claycomo's ordinance is not subject to the licence fee.

According to Associated Press, at issue was a measure approved last year by Claycomo voters that charges businesses a licence fee of 0.1% of their annual gross receipts with a minimum of $25. Under the city ordinance, Ford's annual fee could have jumped from $25 to $13 million, company officials reportedly said.

AP said that Claycomo officials maintain the fee is justified because the plant places a significant burden on police and fire departments and other city services.

Ford officials, however, reportedly said the company could not absorb such a cost each year and remain competitive.

Company lawyer James Owen told Associated Press that, earlier this year, Ford paid a $25 fee under protest and he reportedly called the new tax an abrupt change.

"We wanted to be a good corporate citizen," Owen reportedly said, adding: "We always have."

Ford spokeswoman Della DiPietro told AP that company officials are pleased with the judge's decision. She reportedly said the 4.6 million-square-foot plant pays about $9 million a year in local taxes, the second highest amount paid by Ford in taxes nationwide in terms of rates per square foot.

The licence fee had been disputed for more than a year, AP noted, adding that a lawyer fro Claycomo City declined to comment.

According to the report, Ford last May filed a county court lawsuit challenging the constitutionality of the Claycomo ordinance, and argued that the plant generates considerable economic activity outside Claycomo and to impose additional taxes was illegal and unfair.

But, in December, Claycomo filed a counter lawsuit against Ford, saying the licence fee was legal, AP said, adding that the city soon began issuing tickets to Ford officials because they had failed to have a business licence.

The city later dismissed the tickets because efforts to resolve the legal dispute between the two sides were continuing, AP added.

Associated Press not ed that, as a result of the dispute, state law makers considered a measure changing the governmental boundaries so that the assembly plant could be moved out of Claycomo and into neighbouring Liberty but the measure failed.