| Part I. — GENERAL DESCRIPTION OF INCOME-TAX SYSTEM |
134 |
| I. Income Tax: |
|
| 1. Taxpayers: |
|
| Individuals |
135 |
| Partnerships |
135 |
| 2. Taxable Income |
135 |
| 3. Assessment of Tax: |
|
| (a) Computation of Taxable Income and Deductions |
136 |
| (b) Computation of Tax and Deductions |
137 |
| 4. Collection of Tax |
137 |
| 5. Procedure and Appeals |
138 |
| II. Company Tax: |
|
| 1. Taxpayers |
138 |
| 2. Taxable Income |
138 |
| 3. Assessment of Tax: |
|
| (a) Computation of Taxable Income and Deductions |
139 |
| (b) Computation of Tax and Abatements |
140 |
| 4. Collection of Tax |
140 |
| 5. Procedure and Appeals |
140 |
| Part II. — METHODS OF TAXING FOREIGN AND NATIONAL ENTERPRISES: |
|
| A. Foreign Enterprises: |
|
| 1. Definition and General Principles |
142 |
| 2. Taxation of Certain Kinds of Income: |
|
| (a) Dividends |
142 |
| (b) Interest |
142 |
| (c) Directors’ Percentages |
143 |
| (d) Royalties for Use of Patents, Copyrights, Trade-marks, Secret Processes, Formulæ and Similar Income |
143 |
| (e) Rents from Real Estate, Mining Royalties and Similar Income |
143 |
| (f) Gain from the Purchase and Sale of Real Estate, Securities or Personal Property |
143 |
| (g) Salaries, Wages, Commissions and Other Remuneration for Services |
143 |
| (h) Income from a Trust |
144 |
| (i) Income from carrying on a Business or Industry |
144 |
| B. National Enterprises |
145 |
| Part III. — METHODS OF ALLOCATING TAXABLE INCOME: |
|
| A. Foreign Enterprises with Local Branches or Subsidiaries: |
|
| I. General Questions and Methods of Apportionment: |
|
| Introductory Observations |
146 |
| (a) Book-keeping and Accounting Requirements |
147 |
| (b) Methods of Allocation |
148 |
| 1. Method of Separate Accounting |
149 |
| 2. Empirical Methods |
149 |
| 3. Method of Fractional Apportionment |
150 |
| 4. Requirements for the Selection of Methods and Value of the Various Methods |
151 |
| (c) Apportionment between Branch and Parent Enterprise: |
|
| 1. Apportionment of Gross Profits of Local Branch to Real Centre of Management abroad |
151 |
| 2. Apportionment of Expenses of Real Centre of Management to Branch: |
|
| Interest Charges |
152 |
| General Overhead |
152 |
| 3. Apportionment of Net Profits |
153 |
| (d) Apportionment between Parent Enterprise and Subsidiaries |
153 |
| II. Application of the Methods of Allocation in Specific Cases: |
|
| (a) Industrial and Commercial Enterprises: |
|
| 1. Selling Establishments |
154 |
| 2. Manufacturing Establishments |
155 |
| 3. Processing Establishments |
155 |
| 4. Buying Establishments |
156 |
| 5. Research or Statistical Establishments, Display Rooms, etc. |
157 |
| (b) Banking Enterprises |
157 |
| (c) Insurance Enterprises |
158 |
| (d) Transport Enterprises |
158 |
| (e) Power, Light and Gas Enterprises |
158 |
| (f) Telegraph and Telephone Enterprises |
159 |
| (g) Mining Enterprises |
159 |
| B. National Enterprises with Branches or Subsidiaries abroad |
159 |
| C. Holding Companies |
159 |
| ANNEX: Table of Tariffs |
160 |
