No. 1148 SIR: The British Ambassador to the Secretary of State BRITISH EMBASSY, WASHINGTON, D.C., November 26th, 1924 With reference to my Note of November 18th, I now have the honour to transmit herewith for your information copy of an Order of His Majesty the King in Council, dated November 7th, 1924, and taking effect from that date, regarding the arrangement with your government for the reciprocal exemption of shipping profits from income tax. I have the honour to be with the highest consideration, Sir, The Honourable CHARLES E. HUGHES, Secretary of State of the United States, Washington, D.C. [Enclosure] ESME HOWARD AT THE COURT AT BUCKINGHAM PALACE The 7th day of November, 1924 PRESENT, THE KING'S MOST EXCELLENT MAJESTY IN COUNCIL. WHEREAS it is provided by subsection (1) of section eighteen of the Finance Act, 1923, that if His Majesty in Council is pleased to declare— (a) that any profits or gains arising from the business of shipping which are chargeable to British income tax are also chargeable to income tax payable under the law in force in any foreign state; and (b) that arrangements, as specified in the declaration, have been made with the government of that foreign state with a vicw to the granting of relief in cases where such profits and gains are chargeable both to British income tax and to the income tax payable in the foreign state; then, unless and until the declaration is revoked by His Majesty in Council, the arrangements specified therein shall, so far as they relate to the relief to be granted from British income tax, have effect as if enacted in that Act, but only if and so long as the arrangements, so far as they relate to the relief to be granted from the income tax payable in the foreign state, have the effect of law in the foreign state: AND WHEREAS it is provided by section two hundred and thirteen of the Act of Congress of the United States of America known as the Revenue Act of 1921, that the term "gross income", for the purpose of income tax chargeable under the law of the United States of America, shall not include the income of a non-resident alien or foreign corporation which consists exclusively of earnings derived from the operation of a ship or ships documented under the laws of a foreign country which grants an equivalent exemption to citizens of the United States and to corporations organised in the United States: AND WHEREAS His Majesty's Government have intimated to the Government of the United States of America that they propose to take the necessary steps under the said section eighteen of the Finance Act, 1923, for providing that any profits accruing from the business of shipping carried on with ships documented under the laws of the United States to a citizen of the United States resident outside the United Kingdom or to a corporation organised in the United States shall be, and as from the first day of May, nineteen hundred and twenty-three, be deemed to have been, exempt from income tax (including super-tax) chargeable in the United Kingdom: AND WHEREAS the Government of the United States of America have signified to His Majesty's Government that they are prepared to regard the exemption to be provided as aforesaid as an equivalent exemption within the meaning of section two hundred and thirteen of the Act of Congress of the United States known as the Revenue Act of 1921: Now, THEREFORE, His Majesty is pleased, by and with the advice of His Privy Council, to declare, and it is hereby declared— (a) that certain profits or gains arising from the business of shipping which are chargeable to British income tax are also chargeable to the income tax payable under the law in force in the United States of America; and (b) that the arrangements aforesaid have been made with a view to the granting of relief in cases where profits or gains arising from the business of shipping are chargeable both to British income tax and to the income tax payable in the United States of America. AND HIS MAJESTY is further pleased to order, and it is hereby ordered, that this Declaration may be cited as The Relief from Double Income Tax on Shipping Profits (United States of America) Declaration, 1924. M. P. A. HANKEY. The Secretary of State to the British Ambassador DEPARTMENT OF STATE, WASHINGTON, January 15, 1925 EXCELLENCY: I have the honor to refer to your note No. 1148 dated November 26, 1924, enclosing a copy of an Order of His Majesty the King, in Council, dated November 7, 1924, regarding the arrangement with your Government for the reciprocal exemption of shipping profits from income tax. The appropriate authorities of this Government have been giving consideration to the matter and feel that some uncertainty exists with regard to the provision in the third paragraph of the Order in Council to the effect that the exemption shall be deemed to take effect on May 1, 1923, whereas your note transmitting the Order in Council dated November 7, 1924, states that it will take effect "from that date". I shall be grateful if you will be so good as to furnish me a statement regarding the exact date from which exemption is granted to American citizens or corporations under British laws in order that the exemption of British subjects or corporations under the laws of the United States may be made effective from the same date. Accept, Excellency, the renewed assurances of my highest consideration. CHARLES E. HUGHES I have the honour to refer to your note of January 15th, concerning the arrangement with my Government for the reciprocal exemption of shipping profits from income tax and to inform you in reply to the enquiry contained in the last paragraph, that the date from which exemption from British Income Tax (including supertax) is granted in respect of shipping profits of American citizens or corporations under British laws is May 1st, 1923. I venture to request that instructions may be issued without delay by the appropriate authorities of your Government whereby the British interests concerned may benefit by this arrangement from the date above mentioned. I have the honour to be with the highest consideration, Sir, Your most obedient, humble servant, The Honourable CHARLES E. HUGHES, Secretary of State of the United States, Washington, D.C. ESME HOWARD EXCELLENCY: The Secretary of State to the British Ambassador DEPARTMENT OF STATE, WASHINGTON, D. C., March 16, 1925 I have the honor to refer to your note No. 159 dated February 13, 1925, concerning the arrangement for the reciprocal exemption of shipping profits from income tax and to state that a communication has now been received from the appropriate authority of this Government in which it is stated that careful consideration has been given to the Order in Council dated November 7, 1924, and to the statements contained in your note above mentioned, and that it has been decided that Great Britain satisfies the equivalent exemption provisions of Section 213(b) (8) of the Revenue Act of 1921. Reference is also made to the Act of Congress approved June 2, 1924, known as the Revenue Act of 1924, which contains the provision relating to taxation for 1924 and subsequent years. The provisions of Section 213(b) (8) of the Revenue Act of 1924 are identical in terms with the corresponding section of the Revenue Act of 1921. It is therefore held that Great Britain satisfies the equivalent exemption provisions of Section 213(b)(8) of the Revenue Act of 1924. It has also been determined that the exemption from Federal tax under this holding shall be deemed to be effective from May 1, 1923, the date stipulated by your Government as the date from which the exemption applies under British laws to the income of American citizens not resident in the United Kingdom and corporations organized in the United States, derived from the operation of ships documented under the laws of the United States. Reference is also made to the last paragraph of Mr. Grew's note dated August 11, 1924, setting forth the construction to be placed upon Section 213 (b) (8). In the last paragraph of your note No. 1106 dated November 18, 1924, you stated that "the Irish Free State in common with the other British Dominions" was not to be considered as affected by the Order in Council. Accordingly the exemption from Federal taxation in the United States will be applied on the basis of this understanding. Accept, Excellency, the renewed assurances of my highest consideration. FRANK B. Kellogg His Excellency The Right Honorable Sir ESME HOWARD, G.C.M.G., K.C.B., C.V.O., Ambassador of Great Britain. PREVENTION OF RADIO BROADCASTING INTERFERENCE BY SHIPS Exchanges of notes at Washington and at Manchester, Massachusetts, Entered into force October 1, 1925 Superseded by later regulations IV Trenwith 4248; Treaty Series 724-A ARRANGEMENT WITH GREAT BRITAIN The British Chargé d'Affaires ad interim to the Secretary of State No. 796 BRITISH EMBASSY, SIR: With reference to your note of July 1st, and to previous correspondence concerning the proposed reciprocal arrangement between the United States Government and His Majesty's Government for preventing interference by ships with wireless broadcasting, I have the honour, under instructions from His Majesty's Principal Secretary of State for Foreign Affairs, to inform you that it has been duly noted that the United States regulations do not now require American ships to be equipped for using the 300 metres wave and that it would seem clear, therefore, that the suggestion in your note under reference for the use of the wave on American ships to be permitted regionally in British waters was merely put forward by the United States Government with a view to meeting what was understood to be the views of His Majesty's Government. I am to point out that the 300 metre wave is used principally in European waters by fishing vessels and other small craft, and it would be impracticable satisfactorily to define the areas in which the wave might be employed. As its use even by such ships may in the near future be abolished, His Majesty's Government are of opinion that it is now unnecessary to qualify the prohibition in regard to United States ships in British waters. His Majesty's Government are in agreement with the opinion expressed in the penultimate paragraph of Mr. Hughes' note on the subject of December 9th last to the effect that the proposed reciprocal arrangement can be |