811.512359 Shipping/8
The Secretary of State to the Danish Minister (Brun)
Sir: I have the honor to refer further to your note of May 22, 1922, in which you refer to Section 213(b) (8) of the Revenue Act of 1921, providing for the exemption from taxation of the income of a non-resident alien or foreign corporation which consists of earnings derived from the operation of ships documented under the laws of a foreign country which grants an equivalent exemption to citizens of the United States, and state that your Government is prepared to [Page 888] declare to the Government of the United States that the income of a non-resident alien or foreign corporation which consists of earnings derived from the operation of ships documented under the laws of the United States will, on the condition of reciprocity, not be subject to taxation in Denmark or Iceland. You express the hope that it may be possible for this Government to extend the income tax exemption in question, on the basis of reciprocity, to the years 1917 to 1920, inclusive.
I have the honor to state that in order to establish between the United States and Denmark and the United States and Iceland the reciprocal income tax exemption provided for in Section 213(b) (8) of the Revenue Act of 1921, it will be necessary for the Danish Government to declare that the income from sources in Denmark and Iceland of a citizen of the United States or of an American corporation which consists exclusively of earnings derived from the operation of ships documented under the laws of the United States is not subject to income taxation in Denmark or in Iceland. Upon the receipt of a note to this effect from the Danish Government this Government will declare, in a note to the Danish Government, that Denmark and Iceland satisfy the equivalent exemption provision of Section 213(b) (8) of the Revenue Act of 1921.
I may state that in the statutes now in force no provision is made for the exemption from taxation by this Government of the income derived from the operation of foreign ships prior to January 1, 1921, and that the appropriate authorities advise the Department that they cannot see their way clear to recommend to Congress a modification of these statutes so as to provide for the exemption of Danish and Icelandic shipowners from the payment of income taxes for the years 1917 to 1920 inclusive.
Accept [etc.]