Mr. Buck to Mr.
Hay.
United
States Legation,
Tokio,
Japan, June 29,
1900.
No. 444.]
Sir: I have the honor to inclose herewith a
copy of a communication to me from Dr. F. Anderson, surgeon in charge of
the United States naval hospital at Yokohama, date of the 17th instant,
with copies of
[Page 763]
correspondence
between him and the chief of the Yokohama revenue administration bureau,
concerning making returns and paying income tax by the officers and
enlisted men of the United States Navy and Marine Corps stationed at the
hospital. I also inclose a copy of a note addressed by me to the
Japanese minister for foreign affairs upon that subject.
In conversation with the minister in respect to the officers and enlisted
men at the hospital being subject to the income tax, he expressed the
desire, in determining the matter, to take into consideration also the
claims of a like nature made by the surgeons in charge of the German and
British hospitals, which would cause some delay.
While I, as yet, have no response to my note, I am of opinion that the
chief of the revenue officials of Yokohama will not further press the
matter of obtaining return of the incomes in question pending the
decision of the Government, as I presume instructions have been given to
that effect.
I have, etc.,
[Inclosure 1.]
Dr. Anderson to
Mr. Buck.
United States Naval Hospital,
Yokohama, Japan, June 17, 1900.
Sir: I have the honor to submit for your
consideration the question of the obligation of officers and
enlisted men of the United States Navy and Marine Corps stationed at
this hospital to make returns of income and pay taxes thereon in
accordance with the provisions of the income-tax law of the Japanese
Empire, now in operation.
In April last some blank forms for making return of income were left
at this hospital, together with printed explanatory remarks.
According to these “remarks,” it seemed to me evident that no person
connected with the hospital came within the provisions of this law,
and therefore none of these blank forms were filled out. Some weeks
later some officers and men on duty at this hospital and in the
active service of our Government received postal cards requesting
them to fill out at once these blank forms and make return of
income.
As the officer in charge of the hospital, I accordingly addressed the
letter, a copy of which is hereto appended and marked “A,” to the
director of the Yokohama revenue administration bureau. In response
to this letter I was called upon by Mr. Tojo, the chief of the
Yokohama taxation office, who stated that the translation of the
word “active” as used in the “Remarks” was not a correct translation
of the Japanese word, and that only officers and men in “actual”
service would be exempt from taxation. I therefore requested that an
official letter be sent me stating clearly the meaning of the law.
On June 15 the letter, in Japanese, a translation of which I have
obtained and appended hereto, marked “B,” was sent to me. A copy of
my reply is appended and marked “C.” According to this translation,
officers and men, during war time only and at the seat of war, are
exempt from taxation. This interpretation practically excludes all
foreign officers and men from exemption.
In my opinion, officers and enlisted men on duty at this hospital are
not legally subject to an income tax, and I do not feel justified in
complying with the provisions of the law myself, nor authorizing
those under my charge to do so, in the absence of any definite
instructions from my Government. The officers and men on duty here
are not here voluntarily, but in accordance with orders from the
Navy Department, which they are compelled to obey.
In conclusion, permit me to call your excellency’s attention to the
text of article 5, subscription 1, of the income-tax law of Japan,
and to article 1, paragraph 4, of the treaty now in force between
the United States and Japan. I have the honor to inclose copies of
the extracts above referred to.
F. Anderson,
Surgeon, U. S. Navy, in charge of
Hospital.
[Page 764]
[Subinclosure A.]
Mr. Anderson to
Mr. Saito.
Yokohama, Japan, May
23, 1900.
Sir: Some time ago blank forms for return
of income were left at this hospital, and to-day postal cards were
received addressed to officers and men stationed here requesting
that these blank forms be filled out and returned.
All the persons so addressed are officers or enlisted men in the
naval service of the United States on active duty. They are
stationed here by orders of the United States Government, and are
liable to be ordered away at any time.
According to paragraph 6, article 5, of “Remarks” accompanying these
blank forms, being naval men in active service, their incomes are
not taxable, nor are they required to make return of salary.
F. Anderson, Surgeon, etc.
[Subinclosure
B.—Translation.]
Mr. Saito to
Mr. Anderson.
Sir: I am in receipt of your communication
under date of May 23, relative to a notice of the amount of income.
Salaries to be received by military men (army and navy) while in
active service, as provided in item 1, article 5, of the income-tax
law, means the salaries to be received by the army and navy men at
the seat of war or at the places to be considered as the seats of
war, and while the rendering of “Jungun” into the English “active
service,” in the remarks appended to the paper of notice lately
distributed by the Yokohama tax office, may not be a proper
rendering, still the spirit of the revenue law is that no tax will
be levied upon the salaries to be receivable in the cases as
indicated above. Military men (army and naval), although under
commission, unless they come under the cases above stated, are under
obligation to pay taxes as officials in civil service, as provided
in articles 1 and 2 of the revenue law.
I have, etc.,
[Subinclosure C]
Mr. Anderson to
Mr. Saito.
Sir: I am in receipt of your communication
of the 15th instant, relative to the construction which your bureau
places upon the wording of that portion of the incometax law of
Japan which exempts the salaries of persons in the army or navy
while on active service.
I understand you now to hold that this exemption applies to such
persons only when they are engaged in active hostilities. My
understanding of the provisions of this law has been that the
exemption applied to all in active service under a commission or
under the orders of the military departments of any government.
In view of the provisions of the treaty between the United States and
Japan, the question is one of such importance that I have considered
it necessary to refer it to the United States minister at Tokyo and
the Navy Department of the United States at Washington, and I would
ask you to be good enough to suspend all action in the matter until
I receive the instructions of my Government.
[Subinclosure D.]
Extract from translation of income-tax law of
Japan, as published by the Yokohama tax bureau.
Art. V. Income tax is not levied on the following incomes:
1. Salaries of persons in the army or navy while on active
service.
Extract from treaty between the
United States and Japan, signed November 22, 1894.
Art. 1, par. 4. They (the subjects or citizens of each of the two
high contracting parties) shall not be compelled, under any pretext
whatever, to pay any charges or taxes other or higher than those
that are, or may be, paid by native subjects or citizens or subjects
or citizens of the most favored nation.
[Page 765]
[Inclosure 2.]
Mr. Buck to Mr.
Siuzo.
United States Legation,
Tokyo, June 25,
1900.
No. 211.]
Sir: Referring to our conversation on the
21st instant respecting the question whether an income tax should be
levied upon the salaries of the surgeons and enlisted men of the
United States Navy now assigned to duty at the United States marine
hospital at Yokohama, in order that this question raised by the
surgeon in charge of the hospital may be presented with more
particularity, I have the honor to respectfully submit for the
consideration of your excellency the grounds upon which the claim of
exemption from income tax is based.
It is claimed that the surgeon in charge, assistant surgeon, and
enlisted men of the Navy, temporarily on duty at the hospital in
Yokohama, are on active service there by assignment of the United
States Navy Department, subject to transfer to some other hospital
or to some naval vessel at any time by the order of the Department,
as much so as if they were on duty on a ship of war or in the
discharge of their official duties at some United States naval
hospital in some foreign country at the seat of war; that they are,
strictly speaking, not domiciled in Japan and have acquired no
residence here; that the hospital is the property of the United
States, erected on land held under perpetual lease granted by the
Imperial Government to the United States for hospital purposes, and
that the surgeons and enlisted men now on duty there are to be
regarded as free from any legal requirement to pay an income tax as
though they were on board a United States ship of war in the harbor;
that they have no business or occupation in Japan other than their
official duties at the hospital and derive no income because of
their being stationed for the time and on duty in Japan, their only
income being their salaries from their Government, and that it is
believed that under the circumstances the income-tax law of the
Imperial Government was not intended to apply in such case.
Article V, paragraph 1, of the income-tax law, under which levy is
sought to be made upon the officers and men at the hospital,
provides that the income tax is not to be levied on “Salaries of
persons in the army or navy while on active service.” While it would
seem that this provision was intended to apply to persons in the
army and navy of the Imperial Government only, as it could not be
contemplated that officers and enlisted men of the army or navy of
any other power could, while in service in the discharge of any
official duties whatever, have their residence and be domiciled in
legal sense within the territory of the Empire—yet should it be
contended that the law does so apply, since the surgeon and men are
really “on active service,” exemption is claimed.
For these reasons the surgeon in charge does not feel justified in
complying with the request made by the tax officials to make return
of income for himself or authorizing the officers and men under his
charge to do so in the absence of instructions from his Government,
and he has consequently informed the chief of the Yokohama revenue
administration bureau that the question is one of such importance
that he has to request that no further steps be taken to enforce the
levy of the tax pending instructions for which he has applied.
Whatever may be the conclusion of the Imperial Government respecting
the question raised I venture to respectfully suggest that pending
such conclusion, and as also pending instructions from my
Government, the levy of the income tax upon the surgeons and
enlisted men at the United States marine hospital be stayed, if
consistent.
I avail, etc.,
