FOREIGN RELATIONS, 1934, VOLUME III



inspection of books for one purpose may very well be an inspection
for every purpose.
  It is your opinion that the cancelation of Article 17 did not perma-
nently extinguish the sovereign's right to inspect the books of the
Oriental Consolidated Mining Company because books form the basis
of taxation. In the case of the Company, however, the whole question
of taxes was settled for the duration of the concession by the agreement
of March 27, 1899, to pay to the sovereign a fixed annual sum of
Yen 25,000 each year, regardless of the productiveness of the mines.
The principle that books form the basis of taxation, therefore, would
not seem to be applicable to the Oriental Consolidated Mining
Company.
  As a practical way out of the difficulty, the Consulate General is
prepared to request the Oriental Consolidated Mining Company fully
to cooperate with the tax authorities at Neihen in the collection of the
income tax, by preparing a statement of third class income paid by it
as mentioned in Article 47 of the Tax Law and otherwise.
  I have [etc.]                                 WM. R. LANGDON

895.63 Or 4/43
    The Secretary of State to the Ambassador in Japan (Grew)

No. 645                          WASHINGTON, December 3, 1934.
  SIR: Receipt is acknowledged of the Embassy's despatch No. 992,
under date October 2, 1934, transmitting letters from the Consulate
General at Seoul in regard to levying of income tax upon the employees
of the Oriental Consolidated Mining Company and inspection of the
Company's books by the Chosen authorities.
  The Department is of the opinion that in general the proposed reply
of the American Consul at Seoul to the Chosen Government General
is reasonably warranted and that its transmission may properly be
authorized. However, it is desired that the second paragraph, which
in the draft prepared at the Consulate General begins:
  "The Consulate General does not dispute the Government General's
view .. ."
be amended to read:
  "In deference to the views of the Government General, the Consulate
General is not disposed to insist on the suggested interpretation favor-
ing the exemption of the employees of the Company from individual
income tax. With regard to the inspection of the Company's books,
however, .. ."
  Very truly yours,                   For the Secretary of State:
                                               WILLIAM PHuILLIPS



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