§ 15. Sir WILLIAM DAVISON
asked the Secretary to the Overseas Trade Department what arrangements have been made with the Russian Soviet Government to secure the revenue from loss and to rectify the handicap now suffered by 1518 British traders in competition with the Russian trade delegation, by reason of the fact that this trade organisation is exempt from the payment of Income Tax as it is maintained by a foreign Government and claims diplomatic immunity?
§ Sir J. SIMON
I have been asked to reply. Under the general principles of international law, as interpreted by the courts in this country, any foreign Government trading organisation, as such, is exempt from the payment of Income Tax; and the negotiations for the temporary Trade Agreement with the Soviet Government did not, in the opinion of His Majesty's Government, afford a suitable opportunity for requesting that Government to waive any rights they possessed in such matters. I would remind my hon. Friend, however, that the great bulk of Soviet trading in this country is actually conducted through agents, such as Arcos and similar companies registered here, who pay tax on their profits, the trade delegation acting in a merely supervisory capacity.
§ Sir W. DAVISON
In view of the fact that this trading is undertaken by the State as a whole and is of considerable magnitude, does the right hon. Gentleman not think that it is desirable that special arrangements should be made in this matter, which is not similar to what obtains in the case of other foreign countries?
§ Sir J. SIMON
My hon. Friend may rest assured that the matter has been considered not only by my Department but by the Treasury and other Departments involved, and we are clearly of the view that this is trading by agents appointed by the country concerned—that is, from the point of view of Income Tax.