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dency General of the position taken by the Department concerning these income tax measures, the Legation added the following observation which it is presumed will meet with the approval of the Department:
"As regards the taxation on public and private salaries provided for in the dahirs of October 30, 1939 and December 19, 1939, the above assent does not imply any derogation from the treaty provisions concerning the immunity from taxation of consular officers and their personnel."
Supplement to the "patente” tax
While Enclosure nos. 1 and 2 relate to a tax on salaries, pensions, annuities and income of a like nature, a dahir of April 12, 1941 introduces a "supplement to the Patente Tax" which is, in effect, an income tax on the profits of commercial and industrial concerns and on professional incomes which is the subject of the following comments: The dahir of April 12, 1941 (Enclosure no. 3) above referred to, abrogates and substitutes a dahir of October 30, 1939 (see Enclosure no. 6 to the Legation's despatch no. 1546 of July 5, 1940 56) which increased the "patente" tax rates by 50 percent, and a dahir of December 22, 1939 (Enclosure no. 7 to the same despatch) which imposed a limitation on profits operated by means of levies on the gross amount of public contracts and similar levies on the turnover of specified concerns. These two last mentioned dahirs, remarks the preamble to the dahir of April 12, 1941, did not adequately meet the situation, the one falling partially but severely on the profits of certain enterprises, and the other failing to take into account the veritable activities of the tax payers. For these reasons they have been substituted by the "Supplement to the Patente Tax” which purports to provide a more equitable basis of taxation.
The "Supplement" is levied on the tax payers' profit which is to be represented by certain decreed percentages of the previous year's turnover. Any taxpayer may, however, demand that his assessment be effected on the basis of his net profits. Profits calculated on either basis below fifty thousand francs are exempt from the tax. Between fifty thousand and five hundred thousand the tax rate proceeds in ascending scale from two to five percent.
Taxpayers' complaints as to the basis on which they are assessed, are referred to a commission composed of the President of the Court of First Instance, the Chief of the Direct Taxation Service, and a representative of the Claims Bureau of the Protectorate Government. If the taxpayer is a native Moroccan, a representative appointed by the Grand Vizir also sits on the commission in an advisory capacity,
58 For despatch No. 1546, see Foreign Relations, 1940, vol. III, p. 823; enclosures not printed.
and a similar advisory representative, on the demand of a non-Moroccan taxpayer, may be added from the Federated Chambers of Commerce (American Chamber of Commerce not included in the Federation) or from the particular professional board governing the profession of the taxpayer concerned. There is no appeal from the decisions of this commission.
These are the basic lines of the taxation measures in question.
In view of the fact that instruction no. 12 of November 1, 1940 above referred to has created a precedent for the temporary and withdrawable assent to Moroccan income tax measures, the Legation perceives no objection to a similar conditional assent to the dahir under reference instituting a "Supplement to the Patente Tax", which the text of the law also declares to be an exceptional and temporary
However, in addition to the usual reservations the Legation suggests a further proviso that the question of the justice and equity of amounts assessed on American ressortissants in respect of the tax shall be exclusively within the competence of the American consular courts in Morocco. This suggestion is made in as much as the functions of the Claims Commission created under the terms of Article 10 of the dahir of April 12, 1941 appear to involve an encroachment upon American extra-territorial jurisdiction. It may be pointed out that a reservation in the same terms as that above suggested was made by the Department in regard to a dahir of November 30, 1927 which instituted a tax on city building sites. (See instruction no. 483 of June 27, 1928, file no. 881.512/59 57).
Such a reservation would mean that, contrary to the terms of the dahir, the decision of the commission above mentioned in regard to assessments on American ressortissants is not final and, if an American taxpayer be sued by the tax authorities for payment of his "patente" supplement, the assessment by the said commission may be revised by that court. It would also follow that American ressortissants may not be compelled to submit their complaints to the commission, but may contest with the tax authorities the justice of their assessment and, if no agreement is reached, leave it to those authorities to seek a final decision of the matter through prosecution of the taxpayer in the American consular court. In other words, in so far as concerns American ressortissants the effect of the proposed reservation would be the substitution of that court for the commission.
Enclosure no. 4 represents a decree dated April 15 , 1941 of the Director of Finance which sets forth the procedure to be followed in the administration of the law. It defines net profit as the excess of the turnover over the aggregate charges and expenses
engaged in the operation of the business and enumerates these charges as rent, taxes, normal interest paid to partners, and reserve funds to meet specified losses rendered probable by present circumstances. It calls for no comment or reservation.
Enclosure no. 5 comprises a decree dated April 15, 1941 of the Director of Finance which defines the term turnover as the sum made up of the aggregate amounts of sales, gross receipts, brokerages, commissions, insurance premiums collected, or other items of revenue of the various classes of taxable businesses. The decree also fixes the coefficients applicable to the turnover of the businesses for the purpose of computing their taxable profits. A table of these coefficients which vary according to the character of the concerns and the nature of the businesses in which they are engaged, is annexed to this decree. Owing to the pressure of work a translation of this table consisting of some 500 items has not been made, but some examples are given below of the coefficients applicable to businesses in which American ressortissants are engaged in French Morocco:
Item No. in table 51
Wholesaler (exporter) of offal, tripery, guts,
Wholesaler of lubricating oils, petroleum and
Decreed percentage of turnover which represents net profit
There would appear to be no necessity to enter into the question as to whether or not the decreed percentages on turnover represent equitably or reasonably the net profit of any given business. This is a matter for the consideration of each taxpayer who, in any event, has the option to demand the assessment of his tax upon his actual net profits. American ressortissants would be protected in this re
gard by the reservation discussed in the final paragraphs of the comments on Enclosure no. 3.
No other special reservations are suggested in respect of this decree.
Enclosure no. 6 consists of a dahir of December 14 , 1940 which modifies and completes the dahir of October 9, 1920 which instituted the "patente" tax. The modifications are as follows:
Article 1 adds to professions exempted from payment of the "patente" tax, commercial travelers, representatives and canvassers provided they effect no transactions for their own account and that their relations with their principals are duly defined by contracts in writing. Article 2 of the dahir provides that supplementary taxes will be applied to concerns which, in the course of a tax year, become liable to higher rates of taxation incidental to change or enlargement of business or to removal to other districts.
The tables annexed to the dahir embody a general revision of the ratable classification of professions and occupations.
Subject to the usual reservations and subject to the remarks contained in the succeeding paragraph, there would appear to be no objection to the Department's validation of the application to American ressortissants of the dahir and annexes under reference.
In as much as under Table B (second class) furniture removal contractors are to pay a tax of 15 francs per horse power unit on their motor vehicles, an additional reservation should be included from the Department's instruction no. 19 of November 29, 1940 (file no. 881. 512/153) 58 to the effect that consent is not given to the variable taxes in the tariffs which involve assessment on the basis of the horse power of motor vehicles, in as much as this basis of taxation is deemed to be discriminatory against American manufactured automobiles.
The taxation referred to in Enclosure no. 6 is of a normal and permanent character. Consequently the Department's assent thereto would not be temporary or withdrawable as in the cases of the income tax and supplement to the "patente” tax.
J. RIVES CHILDS
The Secretary of State to the Chargé at Tangier (Childs)
WASHINGTON, December 2, 1941.
SIR: The Department has received your despatch no. 364 of September 30, 1941, informing the Department that the French Resident General has made formal application for the Department's assent to
58 Foreign Relations, 1940, vol. III, p. 829.
59 A note in accordance with this instruction was addressed to the French Resident General, January 22, 1942; not printed.
the application to American ressortissants in the French Zone of Morocco of various taxation dahirs and decrees, these relating to an income tax, the "patente" tax, and a supplement to the "patente” tax.
You may inform the French Resident General that, subject to the reservations suggested by the Legation, which should be embodied in your note to that official, this Government consents to the application of these dahirs and decrees to American nationals and American protected persons as of the date this Government's consent is conveyed to the French Resident General, provided that they are applied also, of course, to all other nationals without discrimination.
Very truly yours,
For the Secretary of State:
A. A. BERLE, JR.
ATTITUDE OF THE UNITED STATES CONCERNING ANTI-JEWISH LEGISLATION IN THE FRENCH ZONE OF MOROCCO
The Secretary of the American Jewish Committee (Morris D.
NEW YORK, March 31, 1941. [Received April 2.]
DEAR SIR: On behalf of my fellow-officers and the Executive Committee of the American Jewish Committee, I beg leave to call your attention to the following subject, which we regard as one of concern to the government of the United States.
According to a decree of the present government of France, published in the Journal Officiel of October 18, all persons "descended from three grandparents of the Jewish race, or descended from two grandparents of the same race and married to a Jewish consort" are denied access to and exercise of public functions and commissions which cover practically all branches of the public service, civil and military, as well as participation in all publishing, motion picture, and radio broadcasting enterprises. Article IX of this decree states: "The present law applies to Algeria, the colonies, protectorates and mandated territories."
One of the territories to which this law applies is the Protectorate of Morocco, which, according to the census of 1936, had a Jewish population of 161,312 persons in a total population of 6,298,528. You will recall that, on the occasion of the Algeciras Conference in 1906, at which the Government of the United States was represented by Mr. Henry White, he was instructed by Elihu Root, then Secretary of State, to urge upon the Conference "the consideration of guarantees of religious and racial tolerance in Morocco." Foreign Relations of