893.5123/7: Telegram
The Ambassador in China (Johnson) to the Secretary of State
[Received September 3—9:48 a.m.]
430. Embassy’s 401, August 11, 4 p.m., concerning Chinese income tax law. Rules for enforcement of provisional income tax regulations were adopted by the Executive Yuan on August 25 and published in the National Government Gazette. According to these rules, the regulations are to be effective October 1, but no mandate has been issued. According to press reports, collections from the public functionaries and on bank deposits and bonds will commence October 1, but collections on other categories will not commence until January 1, next. It is understood that exemption from the payment of the tax will be granted diplomatic officials of countries which accord similar treatment to Chinese diplomatic officials.
This Embassy has received a note dated August 25 from the Foreign Office, transmitting copies of the regulations and requesting that American nationals be instructed to comply therewith. Similar notes have been received by the other diplomatic missions.
French Embassy replied September 1 to the Foreign Office, pointing out that under article 40 of the Treaty of Tientsin of 185876 no obligation of this nature could be imposed upon French nationals in China.
Japanese Embassy is understood to have instructed Japanese subjects to ignore the regulations.
British Embassy is merely acknowledging the receipt of the note with the statement that the matter is being referred to the British Foreign Office. British Embassy believes that the British Foreign Office will take the position that the British Government cannot consent to the payment of the tax by British subjects unless it is also paid by other foreign nationals.
I respectfully recommend that this Embassy reply to the Foreign Office, stating that the American Government cannot acquiesce in the [Page 630] payment of the tax by American nationals unless it is paid by other foreign nationals. The Department’s telegraphic instructions will be appreciated.
Atcheson77 reported September 2, 9 a.m., that an American correspondent was informed by an official of the Ministry of Finance that the Chinese Government anticipated opposition by treaty powers and was merely placing the matter on record for future use in the event of favorable replies from diplomatic missions to the Foreign Office note of August 25.