DOUBLE TAXATION RELIEF (PORTUGAL) (Hansard, 27 November 1961)

§ Mr. Eric Fletcher (Islington, East)

I am sure that the House would not wish to approve an Order of this kind without 195 a detailed explanation from the Minister. On the face of it, it seems to be a most extraordinary Order calling for a good deal of explanation, and I have no doubt that some of my hon. Friends will want to debate the matter. I think that it would be in accordance with precedent if, before we debated it, we had an explanation from the Economic Secretary about it.

May I indicate one or two of the more obvious points of criticism that appear on the most casual and superficial reading of the Order? For example, why is it that we are only now to have a Double Taxation Relief Order with Portugal? Is not Portugal our oldest ally? We have had Double Taxation Relief Orders with a number of other countries for a long time. Why has our oldest ally been postponed to this date?

Secondly, when we are now to have a Double Taxation Relief Order with Portugal, why is it limited to shipping and air transport profits? There has been a good deal of discussion in the House recently about air transport, civil aviation and subsidies of one kind and another. What is particularly meritorious about shipping and air transport profits that justifies a Double Taxation Relief Order being applied to those operating concerns alone to the exclusion of all other commercial undertakings trading with Portugal, of which there must be a large number?

Thirdly, we are entitled to know to exactly what kind of undertakings the Order relates. I notice from the Explanatory Note that arrangements have been made which enable the Portuguese Government, I understand of their own volition, to apply the Order to "any Portuguese Overseas Province". May I take it that that includes Angola? Are we to understand that the benefit of this Order can be applied at will by the Portuguese Government to companies of that nature trading with Angola?

Next, I should like to know exactly what is meant by the reference to Portuguese undertakings dealing with ships and aircraft. It is notorious that a great deal of the international carriage by sea and shipping undertakings takes place through ships which have, to say the least, a nebulous international residence—sometimes it is Panama, sometimes elsewhere—where there are differ- 196 ent fiscal arrangements. We should want to be sure that there is nothing in this Double Taxation Order that could possibly operate to the disadvantage of genuine British companies trading either in shipping navigation or air transport navigation. These appear to me, on a mere reading of the Order, to be some of the more obvious points on which explanation is desirable before we can usefully debate the merits of the Order.

§ The Economic Secretary to the Treasury (Mr. Anthony Barber)

Perhaps I might take the points raised by the hon. Member for Islington, East (Mr. Fletcher) in the order in which he made them. He asked, first, why it is only now that we have a Double Taxation Relief Agreement with Portugal. The reason is that this has taken some years to negotiate, even though it is, as the hon. Member has observed, operative over only a limited field.

It is the general policy of Her Majesty's Government to negotiate double taxation agreements wherever possible as long as they are satisfactory to ourselves and, of course, to the other country concerned. Indeed, if it had been possible to negotiate with the Portuguese a reasonable double taxation agreement covering a wider field, we would certainly have done so. This answer probably covers the second question raised by the hon. Member as to why the Order is limited to shipping and air transport. So far, we have not been able to reach with the Portuguese any agreement going beyond the categories referred to in the draft.

The hon. Gentleman next referred to the kinds of undertakings which this agreement relates to and referred to the particular Article—Article III—about the possible extension of the agreement to Portugal's overseas provinces or to any territory for whose international relations the United Kingdom Government are responsible. I think that he is right in saying that this Order could be extended to cover Angola, but I would point out to him that that could only be done with the concurrence of the United Kingdom, but, here again, I think that I ought to point out to the House that this provision is common form in most double 197 taxation agreements and, of course, works to the advantage of both contracting parties.

The hon. Gentleman posed a question on the expression "United Kingdom undertakings". He is a lawyer, and I hope he will agree, with reference to Article II (e), that it is very difficult to envisage an explanation further to what is already in that paragraph; the expression is there clearly defined; and in frankness with the House, I really could not add to that without being asked to give an opinion on a specific case if the hon. Gentleman has a case in mind I will do my best to answer "off the cuff", but I would much rather give him a considered answer.