811.512337 Shipping/16

The Chargé in Cuba ( Briggs ) to the Secretary of State

No. 3891

Sir: I have the honor to refer to the Department’s air mail instruction No. 1510 of April 14, 1943 (no file number), in which the Embassy was requested to seek from the Cuban Government a clarification of the concluding paragraph of a communication of the Minister of Finance dated November 11, 1942, enclosed with the Cuban Government’s note No. 1125 of November 14, 1942, the contents of which, it was felt, lent themselves to confusion in interpretation.

There is Attached a copy of the Embassy’s note No. 415 to the Foreign Office, dated April 21, 1943,59 in which the paragraph under reference is quoted and the statement made that it presumably is intended to cover both individuals and corporations of American and [Page 276] other nationality acting as contractors or sub-contractors for the United States Government on defense projects in Cuba. The note also points out that the term “profits or income” may lend itself to confusion in interpretation and inquires what, if any, application the Cuban income tax would have on the groups indicated in the paragraph under reference.

Although this matter has since been repeatedly brought to the attention of the Cuban Government, no definitive reply has been received from the Foreign Office to the Embassy’s note No. 415 mentioned above. Inquiries made of the Minister of Finance by the Economic Counselor, however, have elicited the Attached reply, dated July 16, 1943,60 in which an attempt is made to clarify the phrase “profits or income”. Ingeniero Montoulieu’s clarification reads, in translation, as follows:

“The phrase ‘profits or income’ contained in the final paragraph of the communication under reference must be understood to comprise two types of taxes which, in our fiscal legislation, are called taxes on profits [utilidades]60a and taxes on income [renta]60a and it must not therefore be understood that profits or income are one and the same thing in our fiscal system.”

No mention is made in the Minister’s letter of the other points raised in the Embassy’s note No. 415,61 but the foregoing apparently indicates that it is the Cuban Government’s intention to tax, in accordance with existing fiscal legislation, the “profits” and the “income” obtained from defense projects in Cuba by individuals or corporations acting as contractors or sub-contractors for the United States Government. As the Department is aware, the Cuban “income” tax was established by Decree-Law No. 1 of December 31, 1941, while the Cuban “profits” tax, with such modifications as have since been made therein from time to time, has been in effect since before the days of the Republic. Income and profits tax rates were substantially modified by the Cuban tax Law (No. 7) of April 5, 1943; of which a copy and translation were submitted to the Department with the Embassy’s despatch No. 2734 of April 10, 194362 (file No. 851.2).

The Embassy would appreciate receiving an expression of the Department’s opinion as to whether it considers the information [Page 277] furnished by the Minister of Finance adequate or whether a further clarification is considered necessary.

Respectfully yours,

For the Chargé d’Affaires a. i.:
Albert F. Nufer

Counselor of Embassy for Economic Affairs
  1. Not printed.
  2. Not printed; it was addressed to Mr. Nufer by the Minister of the Treasury, Eduardo I. Montoulieu, who succeeded Irisarri in that position in May 1943.
  3. Brackets appear in the original.
  4. Brackets appear in the original.
  5. Note No. 415 further called to the attention of the Minister of State, Emeterio S. Santovenia, the letter of November 11, 1942, addressed to his predecessor, José A. Martínez-Viademonte, by the Minister of Finance, and reminded Santovenia that Irisarri, in that letter, had “expressed the opinion that consideration should be given to requests for tax exemption received from official agencies of the United States Government.” (811.512337 Shipping/16)
  6. Not printed.