811.512368 Shipping/5

The Secretary of State to the Greek Minister (Simopoulos)

[Extract]

The Secretary of State presents his compliments to the Greek Minister and has the honor to refer to the Minister’s note of February 29, 1928, setting forth the provisions of the Greek income tax law exempting from taxation earnings made in Greece by ships flying a foreign flag.

The Secretary of State has the honor to inform the Greek Minister that before it can be determined whether these exemptions are equivalent to the exemptions that may be accorded by the United States under Section 213(b) (8) of the Revenue Acts of 1921 and 1924 it will be necessary for the appropriate authorities of the Government to be informed as to whether:

(a)
during the years 1921–1924, inclusive, taxes have been collected by the Greek Government from the revenues of American citizens not residing in Greece or of corporations organized under the laws of the United States, derived from the operation of ships documented under the laws of the United States;
(b)
the exemption provided in Article 3, Paragraph 7 of the Law, No. 3338 applies to the profits derived by a citizen of the United States not residing in Greece, and to corporations organized under the laws of the United States, or whether in the case of such citizen the exemption only applies if he resides in the United States;
(c)
the exemption applies in cases where citizens of the United States or corporations organized under the laws of the United States maintain agencies, branch offices, or representatives in Greece, in connection with the operation of ships documented under the laws of the United States.

In this connection the Secretary of State has the honor to state that he has been informed by the appropriate authorities of the [Page 85]Government that if it is eventually determined that the pertinent exemptions in the Greek income tax law are equivalent to the exemption provision of Section 213(b) (8) of the Revenue Acts of 1921 and 1924 it will be unnecessary for the United States to conclude any agreement with Greece relative to the exemption of earnings derived from the operation of ships documented under the laws of the two countries.

With reference to the Minister’s request that the collection of income tax on the earnings in the United States of the National Steam Navigation Company, Limited, of Greece, be delayed until the appropriate authorities of the Government have determined whether the exemptions provided for by Greek law are equivalent to those provided for by the income tax legislation of the United States, the Secretary of State has the honor to inform the Greek Minister that there is no provision in the income tax law of the United States or in the regulations issued thereunder which authorizes a collector of internal revenue to refrain from collecting income tax properly due from a taxpayer. The Treasury Department however has informed the Secretary of State that it will suggest to the Collector in New York that he withhold for a reasonable time the collection of income tax in the case of the National Steam Navigation Company, Limited, of Greece, provided such action will not jeopardize the ultimate collection of the tax due. In the meantime if the Greek Minister will supply the additional information needed the appropriate authorities of the Government will be able to arrive at a definite decision with reference to the general question of the exemption of earnings made in the United States by ships flying the Greek flag.