The Secretary of State to the Minister in Liberia (Walton)
A–22. In the contract concluded between the Government of Liberia and Pan American Airways on July 14, 1941,41 authorizing the company to establish aerial transportation in Liberia, provisions relative to taxation of the company are contained in Article 6 as follows:
“Sixth: The Government agrees that the Company shall be granted free entry on the importation of aviation fuel and lubricating oil for the use of its airplanes as well as on spare parts and accessories for its airplanes and radio equipment and all material and equipment used in building and equipping aerodromes and landing fields. It is expressly understood, however, that such exemption from import duties does not apply to importations for the personal use of its officials and employees nor for material and supplies for use on its motor boats and launches. The Government agrees not to impose special or discriminatory taxes or fees on the Company or its business during the life of this Contract. Stamp duty will be assessed on tickets, permits of residence and all other documents which are required by the laws of the Republic to be stamped. The Company shall enjoy no exemption from taxes or fees except those expressly enumerated in this contract.”
A somewhat more liberal provision for exemption from taxation was included in the agreement relative to Defense Areas entered into [Page 700]between the Government of the United States and the Government of Liberia on March 31, 1942 (Executive Agreement Series 275),42 in which the Government of Liberia granted to the Government of the United States the right to construct, control, operate, and defend such military and commercial airports in the Republic of Liberia as might mutually be considered necessary. Article 4 of the Defense Areas Agreement provides:
“All materials, supplies and equipment for the construction, use and operation of said airports of the United States Government and for the personal needs of the military and civilian personnel and their families, shall be permitted entry into Liberia free of customs duties, excise taxes, or any other charges, and the said personnel and their families shall also be exempt from all forms of taxes, assessments and other levies by the Liberian Government and authorities, including exemption from Liberian regulations pertaining to passports, visas and residence permits.”
In view of the fact that Pan American Airways is now operating certain services under contract with the United States Army and Navy and may be said to be acting as an agent for the military services, carrying no civilians other than those whose transportation has been approved as essential to the prosecution of the war, and in view of the fact that substantially all of the tax payments made by Pan American Airways to the Liberian Government in regard to such services are expenses for which the United States Government must reimburse the Company under its contract with the United States Government, the War Department has expressed the view that Pan American Airways is entitled to the tax exemptions provided for in Article 4 of the Defense Areas Agreement of March 31, 1942 in connection with such services.
Pending further instructions the Department does not desire that the matter be taken up with the Liberian authorities but wishes to have your comment on the question of an approach to the Liberian Government in an effort to obtain for Pan American Airways and its personnel the exemptions mentioned in Article 4 of the Defense Areas Agreement. At the same time please advise the Department as to the number of Pan American employees now working on the airports involved.