A—s

186

25 April 1907.

the Company is here in London, or at least within the jurisdiction of the United Kingdom, and it is always a question in each case, a pure question of fact, whether that criterion is or is not satisfied. There are a great many companies carrying on operations, for instance, in the Transvaal, a great many gold-mining companies of which that cannot be said, where the directing power, the real head and centre and directing power is not here, but is in the Transvaal, the spot where the physical operations of mining are carried on, and wherever that is the case the Imperial income tax is only exigible from any part of the profits which is remitted to this country, and actually received here. It is only when in point of fact the Courts come to the determination with regard to a particular company, that the head and centre of the operations are here, that the company is regarded as in point of law resident or domiciled here, that the whole of its profits comes w r ithin the reach of the income tax law. It is open to any company to alter its arrangements in that respect if it is to its interest to do so, but set long as the company conceives it to be in its interests to carry on the main directing power of its operations within the area of the United Kingdom, a matter which is entirely within its discretion to determine one way or the other, it has always been the law—it is no new law—in this country that the whole profits made as the result of that company's operations are subject to income tax here and the profits of the company as a whole are liable to be so charged. I cannot hold out any hope that the Imperial Parliament will effect any change in that principle of law. To do so would be to deprive ourselves here of an amount which I should be very sorry offhand to calculate, and also it would be to fly entirely in the face of the principle of our income tax law, which is that wherever a person, a natural person or an artificial person, chooses for purposes of his or their own, to domicile themselves in this country, to take the advantage of our laws for the purposes of carrying on their trade, they are proper subjects of taxation, and we cannot discuss the question amongst whom in what part of the world the ultimate profits are divided. We have many such cases, not only in connection with the Colonies; we have many more cases in connection with foreign countries. In South America, as Dr. Jameson knows, we have a great many South American railways, and although the whole operation of the railway as a railway is carried on in South America, the capital has been, as a rule, very largely subscribed here, and the board of directors meets here, and the operations of the company are carried on here. We tax those companies, although they are South American companies in the same sense in which De Beers is a Cape Colony Company. Sir JOSEPH WARD : Do you tax in that case the individual in London on the profits of the Company ? CHANCELLOR OF THE EXCHEQUER : No, we tax the Company upon its profits. We take the profits of the Company and tax them. Sir JOSEPH WARD : Then does the individual upon his annual income again pay on a proportion of these profits ? CHANCELLOR OF THE EXCHEQUER : No; if the individual has a claim for abatement or anything of that kind that is another matter. We tax the profits of the Company, and then the Company hands on the burden of the liability, no doubt, to the individual shareholder by deducting from

Double Income Tax. .(Chancellor of the Exchequer.)