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United States Department of State / Foreign relations of the United States diplomatic papers, 1937. The British Commonwealth, Europe, Near East and Africa
(1937)

Canada,   pp. 160-199 PDF (14.9 MB)


Page 179


   Both Mr. King and Mr. Dunning professed great interest in this
Convention prior to their departure for London and, at this critical
time, I consider it important that they should know that this Depart-
ment no longer stands in the way of ratification. [Hull.]
                                                           WELLES
S11.5123 Foreign Investments/32
Memorandum by the Adviser on International Economic Affairs
                              (Fe"i)
                                     [WASHINGTON,] July 19, 1937.
  The Canadian Minister called upon the Secretary of State to present
to him certain thoughts with regard to contemplated revision of our
tax laws bearing upon the taxation of non-resident aliens in foreign
,corporations. The Secretary asked me to be present.
  The Canadian Minister said he wished to rest his remarks upon the
general idea that the Canadian and American peoples, and their eco-
nomic relations, are extraordinarily close and that they will be best
served by constantly striving to look at their interests as part of a
,unified whole and developing in every way relationships between them.
He therefore wished to express his sense of regret if action in the
tax field taken by this country would work counter to this develop-
ment, which he was confident likewise represented the Secretary's
general attitude. The Secretary indicated that this was so.
  Further, the Minister continued that the Canadian interest in
American securities is widely scattered among a great number of small
investors. If therefore prospective legislation took the form of im-
-posing a heavy original withholding tax (221/2 and 25 percent have
been mentioned), and all these small investors found their dividends
lessened by this amount, unless they went through the whole procedure
,of filing income tax returns to the United States, the Minister stated
he was afraid it would adversely affect Canadian opinion. In saying
this -the Minister stated he did not want to seem to be threatening
retaliatory action but merely to call attention to what appeared to
him an inevitable consequence.
  Further, the Minister dwelt upon the disappointment that would
;arise in Canada if the tax treaty recently negotiated between the two
governments is not ratified by the United States Government. The
Secretary indicated that he thought this had been ratified. The
reasons for recent delay were not known either to the Secretary or to
myself. The Treasury had been informed that this Department was
prepared to have the treaty ratified and it understood that the Treas-
ury had so notified Senator Pittman.
179
CANADA


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