The Secretary of State to the Egyptian Minister (Ratib Bey)

The Secretary of State presents his compliments to the Honorable the Appointed Minister of Egypt and, with reference to the memorandum which the Chargé d’Affaires left at the Department of State on September 27, 1935, regarding the taxation of certain securities owned by the Egyptian Government and deposited in a bank in New York, quotes below an excerpt from a communication from the appropriate Department of this Government:21

“There is no provision in the Federal income tax law for taxing income of foreign governments. Section 116 (c) of the Revenue Act of 1934 specifically states that the income of foreign governments received from investments in the United States in stocks, bonds, or other domestic securities, owned by such foreign governments, or from interest on deposits in banks in the United States of moneys belonging to such foreign governments, or from any other source within the United States shall be excluded from gross income and shall be exempt from taxation. There has been no change in this provision in the Revenue Act of 1935.”

The question of taxation of the above-mentioned securities by the State of New York is being taken up with the appropriate authorities of that state and as soon as a reply is received the Minister will be advised.

  1. Letter of October 8, 1935, from the Acting Secretary of the Treasury to the Secretary of State.