The British Ambassador (Lindsay) to the Secretary of State
Sir: I have the honour to inform you that a request has been received from the Governor of Newfoundland, through His Majesty’s Principal Secretary of State for Foreign Affairs, that similar benefits may be extended on a reciprocal basis to Newfoundland holders of United States securities to those embodied in the reciprocal agreement between the Governments of the United States and the Dominion of Canada signed on December 30th last under which the rate of taxation imposed on dividends and interest coupons payable to nonresidents is limited to 5% for each taxable year.
In support of this request it is pointed out that income tax in Newfoundland is not deducted from interest and dividends payable abroad. Companies in Newfoundland are liable to normal tax at a flat rate but not to super-tax. Dividends paid by companies so taxed are not further liable to normal tax in the hands of shareholders, whether resident or non-resident, although they are liable to direct assessment to super-tax in the hands of individuals (but not companies). Nor is any deduction of tax at the source made from interest or other fixed or determinable income paid to non-residents, though taxes due from a non-resident may be collected from any person who pays such income to the non-resident.
In the circumstances it is hoped that the Government of the United States will be prepared to accede to the request. In that event, I would appreciate your views as to the method of proceeding.
I have [etc.]