The Japanese Ambassador ( Matsudaira ) to the Secretary of State

No. 41

Sir: With reference to your note dated September 1, 1925, concerning the reciprocal exemption from taxation of income derived from the operation of merchant vessels, I have the honor to state, under instructions from Tokio, that my Government is happy to signify its willingness to agree with the views of the Treasury Department as stated in your note under acknowledgment; namely, that the reciprocal exemption shall be carried out from and including July 18, 1924, the date on which the Japanese Law No. 6 was promulgated, without adopting the methods suggested in my note dated June 18, 1925; and, further, that the exemption from taxation accorded by Section 213 (b) (8) of the Revenue Act of 1924 applies only to such income as is derived from sources within the “United States” as that term is defined in Section 2 of the said Act, and from sources within the Virgin Islands.

In bringing the above to your knowledge, I am happy to note that a unanimity of views has been reached between our two Governments on this subject, and shall be glad if you will be good enough to take steps with the Treasury Department to the end that an arrangement looking to the reciprocal exemption in question be put into force.

Accept [etc.]

T. Matsudaira