As my Government understand that the contents of this document have
already been communicated to you by the United States Representative in
Persia, I am instructed to state that Sir Percy Loraine’s attitude on
this subject, as expressed in the enclosed memorandum, has the entire
approval of His Majesty’s Government.
[Enclosure]
Memorandum by the British Minister in
Persia (Loraine) on the Liability of the Subjects of Powers Enjoying
Capitulations in Persia to Pay Persian Taxation, Whether
Imperial or Municipal
The question has been raised in the following form: (1) Do foreign
subjects in Persia enjoy immunity from Persian taxation; and, if so,
(2) in virtue of what treaty right is such immunity claimed?
The answer to this question in the form put is: (1) Yes—in practice;
(2) there is no specific treaty provision.
The question, however, though it appears to go to the root of the
matter, does not in fact do so, and is actually somewhat misleading.
I think there is no difficulty in demonstrating its fallacy.
The fundamental consideration is that no State has the right to
impose taxation except on persons who are under its
jurisdiction.
[Page 571]
The subjects in Persia of the Powers enjoying Capitulations are not
under Persian jurisdiction, but under that of their national
authority.
Thus, the Persian authorities are unable to collect taxation from
foreign subjects, except with the acquiescence of the latter’s
national authority; they are doubly unable to do so because foreign
subjects enjoy by treaty inviolability of person, property and
domicile. Therefore, if taxation claimed be withheld by a foreign
subject, the Persian authorities are debarred from proceeding with
any form of distraint.
The situation which exists as regards taxation is therefore inherent
in the capitulatory regime itself and is inseparable therefrom.
If further evidence of this were needed it can be found in the text
of notes repeatedly addressed by the Persian Government to His
Majesty’s Legation, and no doubt to other Legations also, requesting
the Minister to “instruct” his nationals to pay such and such a
tax.
What the Christian Legations therefore claim is that their consent is
necessary before any Persian tax can be legally levied on their
nationals, and it seems clear that this position is understood and
conformed to by the Persian Government.
Before giving their consent to the levy of a particular tax the
Legations are certainly justified in seeking guarantees in regard to
the equitable incidence of the proposed tax, for they are the
guardians of the interests of their nationals in Persia, and they
reside in a country subject to Islamic law, which does not admit the
principle of equality as between believers and unbelievers.
Equally, where the tax is levied in respect of services rendered, the
Legations are justified in seeking reasonable guarantees that the
moneys collected will be employed for the purposes for which it has
been levied.
Such guarantees are, moreover, in the interest of the Persian
Government themselves, for they are thereby encouraged to perfect
their fiscal and administrative legislation, the present
deficiencies of which are one of the raisons
d’être of the Capitulations, and one of the grounds of
necessity for maintaining them.
It is obvious that the use of this position to place a foreign
subject in an unduly favourable position to compete commercially
with his Persian rivals would be unjustified and abusive. There has,
however, never been any suggestion, so far as I am aware, that the
representatives of the Christian Powers have ever contemplated such
an abuse, and I am quite certain they would never countenance
it.
