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(d) TRANSPORT ENTERPRISES

120. The geographical situation of the N.E.I. makes it a matter of course that, by these enterprises, we can only mean those engaged in shipping and air transport. As from January 1st, 1933, non-resident shipping and air-transport enterprises are exempt on profits derived from freight and passenger service between foreign countries and N.E.I., but not from inter-island transportation (see paragraphs 18 and 31).

121. The principle on which the calculation of the profits of foreign shipping companies has been based in the past is that 50 per cent of the profits made by transport by land and water from country A to country B is allowed for each country. Therefore, the formula for the East Indian profits is: $$ {\rm{N}}{\rm{.E}}{\rm{.I}}{\rm{.}}\;{\rm{net}}\;{\rm{profit}} = {{\mathop {{\rm{Inter - island freight and passage money, plus half}}}\limits_{{\rm{freight and passage money to and from N}}{\rm{.E}}{\rm{.I}}{\rm{.}}} } \over {{\rm{Total amount of freight and passage money}}}} \times {\rm{total net profit}} $$ Notwithstanding the opposition of the principal shipping companies, the Court of Tax Appeals has always upheld this formula, which has been accepted by the foreign companies whose interests in the levies in this country are not so great.

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