895.63 Or 4/43
The Chargé in Japan ( Neville ) to the Secretary of State
[Received October 22.]
Sir: I have the honor to transmit copies of two letters dated August 6 and September 25, 1934, with their enclosures,23 received from the American Consul in charge of the Consulate General at Seoul, Chosen, in regard to the levying of income tax upon the employees of the Oriental Consolidated Mining Company, an American concern which operates gold mines at Unsan, Chosen.
The particular point at issue is the contention of the company that its books are not subject to inspection by the tax authorities. The original concession,24 a copy of which was transmitted in this Embassy’s despatch No. 134 of September 23, 1932, contained a clause (Article XVII) giving the King of Korea the right to inspect the company’s books. This Article was subsequently deleted, and Article XII consequently rendered inoperative, in return for a cash payment [Page 825] of Yen 200,000 and an annual payment of Yen 25,000, regardless of the output of the mines. The company is of opinion that the deletion of the clause in question carries permanent immunity from inspection by tax officials.
An examination of the record seems to indicate that the original concession and its subsequent modifications were drawn up without reference to the possible imposition of an individual income tax. There is no evidence of an intention on the part of the Government General of Chosen to levy taxes on the company. It is obvious, however, that the authorities in Chosen insist upon the right to inspect the company’s books in order to verify the amounts paid to employees who are subject to income tax under the law.
In view of the stringent provisions of income tax legislation in the United States, I feel that the Embassy would not be justified in supporting the company’s position in this matter without the Department’s express approval. I am accordingly instructing Mr. Langdon25 to withhold his proposed reply to the Government General pending a review of the case in the Department.