701.0693/8–2649: Circular telegram
The Secretary of State to Certain Diplomatic and Consular Offices in China14a
Dept concerned over demands Commie auths for payment taxes on US Govt real property used exclusively for Govt functions in occupied China.
Dept concurs Nanking’s recommendation (Nanking’s 1836, Aug 19) punctual compliance reporting and assessment procedure necessary with simultaneous expression reservations rights on any points which might imply submission by US Govt to tax powers local auths.
Dept has taken position taxes demanded not payable under internad law as one sovereign govt may not be taxed by another, either recognized or unrecognized, on properties owned and used for govt purposes. For ur own info case is stronger for dipl property than consular property. However, argument shld be made on basis of govt-owned property used for official purposes.
Make no payments without advance clearance Dept if time possibly permits, and unless other Western Powers definitely agreed pay such taxes. Take no initiative in making payment or encouraging other powers make tax payments.
Necessary that posts make every effort retain protect US Govt property without payment of taxes. As a practical matter, however, it may be necessary to pay taxes demanded. Such taxes to be paid only if in discretion principal officer of each post, based on his knowledge local situation, appears imminent threat exists of eviction, condemnation or confiscation or danger to security Amer personnel.
If necessary to make payment of such taxes Dept expects that appropriate written protests will be made to local auths and that matter be reported to Dept in order that appropriate instru[ction]s may be sent Peiping on protests cover all cases.
If taxes on realty are confiscatory in nature this will be an element for consideration by Dept in deciding whether to retain the post.
Inform Dept immed estimated costs involved. Necessary allotments will be authorized.
Keep Dept fully and currently informed.
- Sent to Canton, Hankow, Nanking, Peiping, Shanghai, Tientsin, and Tsingtao.↩