2588 DOUBLE I~COME TAX-SHIPPING PROFITS-GREAT BRITAIN. It is equally clear, however, that such a corporation would be a cor- poration organized in the United States and deriving income from the operation of a ship or ships documented under the laws of the United States, and would as such be entitled to exemption from British tax upon income derived from the operation of vessels of the United States, if the exemption offered by Great Britain were to be deemed equivalent to that offered under American law. It is understood that the proposal which the British Government now makes in its suggested draft of a Declaration in Council does not require that the American corporation shall operate its business outside the United Kingdom in order to be entitled to exemption from British income tax. The British Government proposes, ac- cording to the understanding of the Secretary of the Treasury, to exem:pt from British income tax (including super-tax) "any profits accrumg from the business of shipping carried on with ships docu- mented under the laws of the United States to a citizen of the United States resident outside the United Kingdom or to a corporation organized in the United States". Upon the explicit understanding that the American corporation is thus exempted regardless of whether it does business in the United Kingdom or has an office or place of business therein or whether directors' meetings are held in the United Kingdom and the control of the corporation is there ex- ercised, the Secretary of the Treasury is of the opinion that the offer communicated in the Embassy's note of February 11, ~924, satisfies the requirements of Section 213(b)(8) of the Revenu~ Act of 1924, so far as the United Kingdom is concerned. I The Secretary of the Treasury asks that I make clear the fact that the Treasury Department intends to construe Section 213(b)(8) of the Revenue Act of 1924 as not affording exemption to British subjects or others resident in the British dominions, colonies, de- pendencies, or possessions, or to corporations organized under and existing by virtue of the laws of the British dominions, colonies, dependencies, or possessions, unless the laws of such dominions, col- owes, dependencies, or possessions grant an equivalent exemption to citizens of the United States and to corporations organized in the United States. The exemption from tax of income derived from the operation of ships of British registry will be confined to individuals resident in the United Kingdom, other than citizens of the United States, and to corporations organized under and existing by virtue of the laws of the United Kingdom. Accept, Excellency, the renewed assurances of my highest consideration. HIS EXCELLENCY JOSEPH C. GREW Acting Secretary. THE RIGHT HONORABLE No. 1106 SIR: SIR ESME HOWARD, G.C.NLG., K.C.B., Ambassador oj Great Britain. C.V .O ., The British Ambassador to the Secretary oj State BRITISH EMBASSY, WASHINGTON, D. C ., November 18,1924-. B~t~ent b,. Oreat With reference to your note of August 11 th, relating to a proposed . arrangement between the Internal Revenue authorities of Great Brit- ain and the United States with the object of granting relief from double taxation in cases where the profits accruing from the transac-
