2. Mr. Edward M. Taylorasked the Secretary of State for Commonwealth Relations what information he has on the effective percentage rates of taxation levied by the Government of Ceylon on British companies in respect of their operations in Ceylon; and in particular, what the tax would be on gross profits of £50,000, £100,000, and £250,000.
§ Mr. Cledwyn HughesThe rate of taxation levied by the Government of 173 Ceylon on British companies depends on whether the company holds immovable property in that country or not. In the former case, taxation amounts to 84 1/9 per cent. On chargeable profits, although under the existing tax laws the total tax payable is restricted to 80 per cent. In the latter case the total tax payable varies between 72¼ per cent. and 74 1/9 per cent. These rates apply irrespective of the amount of profits earned. To relate these figures to gross profits might give a misleading impression as this would ignore allowable expenses, allowances for depreciation, etc.
Mr. TaylorDoes not the hon. Gentleman agree that even by the present Government's standards these rates of taxation are excessive and unreasonable? Would he also agree that even the small profits left after this taxation are not receivable in this country because of the ban on remittances imposed on 31st July last? Would he finally agree that, in view of the very substantial contribution made by foreign and Commonwealth investment income to our balance of payments, it is about time that the Government took a tougher line with those nations which are expropriating our assets without compensation or who are achieving the same result by putting on unreasonably high taxation and by banning remittances?
§ Mr. SpeakerOrder. I think that the Minister had better answer at this point. We have heard enough of it.
§ Mr. HughesI agree that taxation in Ceylon is very high, but the hon. Gentleman should remember that it has not precluded British companies from continuing to operate at a profit. It falls into a different category from the moratorium on remittances to which he referred and other measures damaging to British interests which were introduced in the July budget to which he referred.