DOUBLE TAXATION RELIEF (Hansard, 23 April 1947)

§ Mr. David Eccles (Chippenham)
This Resolution foreshadows some more agreements with different countries—arrangements, which are very beneficial to British industry. I ask the Financial Secretary to tell us with which countries we are now negotiating. I understand that it is with Nigeria, the Gold Coast and Northern Rhodesia. Are we negotiating with France, Holland and Denmark, and, if so, what progress is being made? Can we expect this Resolution to be put into practice in connection with those countries? I ask especially about France, because it will be a great benefit to our two countries if this convention is likely to be signed in the near future.
My next question is about the extension of our convention with the United States. Article 22 of that Convention gives His Majesty's Government the power to extend the United States Convention to cover the Colonies. It is of great importance that some action should be taken under Article 22. For example, it is very important that the raw material resources of the Empire should be developed as quickly as possible. The world is short of raw materials, and we are in great difficulty in this country because of the high prices. If American capital is to be sought in aid of developing these raw materials—it is often necessary to have that capital because we cannot supply the machinery quickly from here—the Americans are willing to put in a minority interest but not unless the double taxation agreement is extended to cover these countries. If there is an Income Tax of 7s. 6d. in Northern Rhodesia and American capital joins with British capital to develop some raw material in that colony, as things stand now, the Americans can only claim taxation relief in respect of the difference between the United Kingdom standard rate of 9s. and the Northern Rhodesia rate of 7s. 6d., which is 1s. 6d. What we want, if we are to develop our resources with American co-operation, is for the convention to be extended so that they can get the full relief of the United Kingdom tax or the Colonial tax, whichever is greater. The Chancellor of the 1104 Exchequer, I think, told us some short time ago that the South African convention was not entirely satisfactory, and that it was intended to press for some improvement in the convention with the Union of South Africa. If that is done it will have to be brought in under this Resolution. I should like to ask the Financial Secretary to tell us how we are getting on with securing these improvements with the South African conventions because they would be very useful to British business.

§ Mr. Glenvil Hall
I do not know to what extent I would be permitted to answer some of the questions put to me by the hon. Member for Chippenham (Mr. Eccles). This Resolution, as the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) knows only too well, is an enabling Resolution to permit Clauses to go into the Finance Bill when we arrive at that stage. At the present time the rule is that in these double taxation agreements we may give tax credits between one country and the other. Where a convention exists we can only set off the Excess Profits Tax of one country against the similar tax here. What we propose to do in the Finance Bill is to take powers to set off any tax of that kind against any tax here where a convention or agreement exists.
That, of course, is entirely different from the question as to whether tax agreements or conventions have been made with various countries, but with your permission, Mr. Speaker, I would briefly answer the hon. Member for Chippenham by saying that negotiations are in hand, in which we hope soon to reach an agreement, with France. The hon. Member has mentioned the agreements already, made with Australia, Canada, Southern Rhodesia and South Africa. I am sorry I cannot tell how soon negotiations will be taken up again with South Africa, but in my view it will not be yet, because we only recently completed an agreement with that country and the suggestion was that we should wait a little while and see how things went before we continued negotiations and discussions with them. As far as the New Zealand agreement is concerned, we are awaiting settlement; and generally we are hopeful that the Colonies, one or two of whom have been mentioned 1105 by the hon. Member, will make agreements in due course, but at the moment I have nothing tangible to report.

§ Mr. Eccles
Would the right hon. Gentleman be good enough to look into the question of the extension of the United States Convention and Article 22, and in due course let me know who should take the initiative to get that extension, because it is not generally known?