811.512356 Double/4
The Secretary of State to the Netherland Chargé ( Van Breugel Douglas )
Sir: I refer to the Legation’s note No. 2197, of August 8 [6], 1934, in further relation to double taxation.
I am advised by the competent authority of this Government in part as follows concerning the aforementioned subject matter:
“Since the reduction of the Netherland Indian income tax is allowed to a resident of that country only if he has paid a foreign income [Page 608] tax on certain types of income, it is held that the Netherland Indian Government does not satisfy the similar credit requirement of section 131 (a) (3) of the Revenue Act of 193437 and that, therefore, a citizen of that country residing in the United States, in computing his Federal income tax, is not entitled to a credit on account of income, war-profits or excess-profits taxes paid or accrued to any foreign country.”
Section 131 (a) of the Revenue Act of 1934 provides in part:
“(a) Allowance of Credit.—If the taxpayer signifies in his return his desire to have the benefits of this section, the tax imposed by this title shall be credited with:
“(3) Alien resident of United States.—In the case of an Alien resident of the United States, the amount of any such taxes (income, war-profits and excess-profits) paid or accrued during the taxable year to any foreign country, if the foreign country of which such alien resident is a citizen or subject, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country; …”
Section 131 (a) of the Revenue Act of 1932 is identical with the above-quoted provision. Article 695 of Regulation 77, promulgated under the Revenue Act of 1932 reads in part:
“Countries which do or do not satisfy the similar credit requirement.—A country satisfies the similar credit requirement of Section 131 (a) (3) of the Revenue Act of 1932, either by allowing to citizens of the United States residing in such country a credit for the amount of income taxes paid to the United States, or, in imposing such taxes, by exempting from taxation the incomes received from sources within the United States by citizens of the United States residing in such country.…”
Accept [etc.]
- 48 Stat. 680, 719.↩