DOUBLE TAXATION RELIEF (Hansard, 10 November 1954)

§ The Financial Secretary to the Treasury (Mr. Henry Brooke)
I beg to move, That an humble Address be presented to Her Majesty, praying that, on the ratification by the Government of the Federal Republic of Germany of the Convention set out in the Schedule to the Draft of an Order entitled the Double Taxation Relief (Taxes on Income) (Federal Republic of Germany) Order, 1954, a copy of which was laid before this House on 19th October, an Order may be made in the form of that Draft. I think it would be for the convenience of the House if we discussed, at the same time, the two following Orders which stand in my name on the Order Paper.
The first two Orders are rather similar in content, the third is a comparatively minor matter. The first two Orders deal with the double taxation relief agreements which have been negotiated with Germany and Switzerland. It is within the knowledge of the House that since the war a policy of seeking to secure these double taxation agreements with other countries has been pursued. Now to the list, which includes the United States, France, Belgium and the Scandinavian countries, and, within the Commonwealth and Empire, Australia, Canada, New Zealand, South Africa, Ceylon and many of the Colonies, will be added the countries mentioned in these Orders if we approve them tonight.
The agreements with Germany and Switzerland will provide comprehensive relief from double taxation, and while they remain in force will supersede in relation to German taxes and Swiss Federal taxes the provisions of Section 348 of the Income Tax Act, 1952, with which the right hon. Gentleman the Member for Battersea, North (Mr. Jay) will be familiar, and which granted unilateral relief from double taxation. Under these new agreements, the cost of relief will be shared between the Governments of the contracting countries.
If it is the wish of the House, I will go into any degree of detail about the agreements, but perhaps I can best help by assuring right hon. and hon. Members that both the agreements are based upon the draft model agreement drawn up by the Fiscal Commission of the League of Nations and endorsed by the United Nations Fiscal Commission.
1360 The third Order, that dealing with the United States, is no more than an Order to validate a protocol amending the agreement with the United States, in the sense that it will facilitate the extension of the existing agreement to Colonial Territories. It was found that the existing agreement could not be extended to Colonial Territories except as a whole. It seemed to both sides that, in its extension to certain Colonies, it would be desirable for modifications to be made. It is purely in order to do that that this Order is laid. Its purpose, I am sure, is unexceptionable, and I hope that the House will approve the measures by which it is proposed to achieve it.

§ Mr. Douglas Jay (Battersea, North)
As I have no wish unduly to prolong the labours of the Financial Secretary, may I first ask whether I rightly understand that, so far as the German and Swiss Orders are concerned, they follow the standard pattern of the series of agreements which we have had since the war. If they depart from it in any important respect, perhaps the Financial Secretary could tell us what it is.
Secondly, as to the quite different Order relating to the United States, can he say whether this special position has arisen out of proposals to extend the agreement to British Colonies, or to dependent territories of the United States?

§ Mr. Brooke
If I may briefly reply, the two agreements with Germany and Switzerland follow the same pattern. I do not think there are any special provisions to which I should call the attention of the House.
The reason for the United States Order is that it was desired to extend the agreement to several British Colonies. Difficulties were found, in that it was quite clear that some minor modifications would be required, and both the United States and the British Governments are agreed that it is desirable that those modifications should be made so that the extension will become practicable.