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CONTENTS

                                                                                                                                             
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Part I. — GENERAL DESCRIPTION OF INCOME-TAX SYSTEM  106 
1. Taxpayers: 
(a) Individuals  107 
(b) Partnerships  107 
(c) Companies  107 
2. Taxable Income  107 
Assessment of Tax  108 
Schedule 1. — Commerce  108 
Schedule 2. — Industry  110 
Schedule 3. — Agriculture  110 
Schedule 4. — Credits  111 
Schedule 5. — Participations in Concessions  112 
Schedule 6. — Wages and Salaries  113 
Schedule 7. — Professions  113 
4. Collection of Tax: 
(a) By Direct Payment  113 
(b) By Withholding at the Source  115 
5. Procedure in Assessment and Appeals  115 
Part II. — METHODS OF TAXING FOREIGN AND NATIONAL ENTERPRISES: 
A. Foreign Enterprises: 
1. Definition and General Principles  116 
2. Taxation of Certain Kinds of Income: 
(a) Dividends  116 
(b) Interest  116 
(c) Directors’ Percentages (Tantièmes)  117 
(d) Royalties for Use of Patents, Copyrights, Trade-marks, Secret Processes and Formulæ, and Similar Income  117 
(e) Rents from Real Estate, Mining Royalties and Similar Income  117 
(f) Gain derived from the Purchase and Sale of Real Estate, Securities and Personal Property  117 
(g) Salaries, Wages, Commissions and Other Remunerations for Services (including Directors’ Salaries and Fees)  117 
(h) Income from a Trust  117 
(i) Income from carrying on a Business or Industry  117 
B. National Enterprises  118 
Part III. — METHODS OF ALLOCATING TAXABLE INCOME: 
A. Foreign Enterprises with Local Branches or Subsidiaries: 
I. General Questions and Methods of Apportionment: 
(a) Book-keeping and Accounting Requirements  119 
(b) Methods of Allocation: 
1. Method of Separate Accounting  121 
2. Empirical Methods  122 
3. Method of Fractional Apportionment  122 
4. Requirements for Selection of Methods and Value $$$ot the Various Methods  122 
(c) Apportionment between Branch and Parent Enterprise: 
1. Apportionment of Gross Profit of Local Branch to Real Centre of Management abroad  122 
2. Apportionment of Expenses of Real Centre of Management to Branch: 
Interest Charges  122 
General Overhead  123 
3. Apportionment of Net Profit of Branch to Deficitary Parent and vice versa  123 
(d) Apportionment between Parent Enterprise and Subsidiaries  123 
II. Application of the Methods of Allocation in Specific Cases: 
(a) Industrial and Commercial Enterprises: 
1. Selling Establishments: 
Local Establishments selling in National Markets  123 
Local Establishments of Foreign Enterprises selling abroad  124 
2. Manufacturing Establishments  124 
3. Processing Establishments  124 
4. Buying Establishments  124 
5. Research or Statistical Establishments, Display Rooms, etc.  124 
(b) Banking Enterprises  124 
(c) Insurance Enterprises  125 
(d) Transport Enterprises  125 
(e) Power, Light and Gas Enterprises  125 
(f) Telegraph and Telephone Enterprises  125 
(g) Mining Enterprises  125 
B. National Enterprises with Branches or Subsidiaries abroad: 
I. General Methods of Allocation  126 
II. Allocation of Profit to Real Centre of Management within the Country  126 
C. Holding Companies: 
I. National Holding Company controlling one or more Foreign Subsidiary Companies  126 
II. Local Subsidiary Company controlled by a Foreign Holding Company  126 
ANNEX: Table of Tariffs  127 
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