HOUR4/307/1
г
Kr Sullivan,
tish Embassy, Peking
DOUBLE TAXATION (CIVIL AVIATION)
ce ir Liebles Car & Mr Beauchamp IR
As you know, the Chinese air services delegation proposed double taxation provisions for inclusion in the Air Services Agreement. You have a copy of their draft. I explained to the Chinese that an ASA cannot give effect in UK domestic law to such provisions. They would not be covered by the Inland Revenue's own enabling legislation and would need to be the subject of specific legislation. I said that this was a lengthy and cumbersome procedure. Whilst it was virtually impossible, therefore, for us to include double taxation provisions in an ASA, UK tax authorities were very willing to consider the alternative of a separate double taxation agreement for air transport. This would get round the legislation difficulties. As an example, I handed over a copy of the attached Statutory Instrument, the Schedule to which gives the text of an agreement between the UK and Jordan. This covers shipping as well, but the Inland Revenue would be willing to consider an agreement on air transport alone.
2. I asked Mr Qian Zening of the Chinese delegation (CAAC) to ask the Chinese tax authorities to provide details of the taxes which might be leviable in China on a non-resident enterprise. The point about this is that the Inland Revenue do not wish to provide a draft agreement between the UK and PRC until they have the details, in case the draft proved unworkable.
3. I agreed with Mr Qian that the matter could be followed up by the Commercial Department of the Embassy and the Chinese tax authorities. On the assumption that we conclude an Air Services Agreement, I should be grateful if you would ask Commercial Department to take this on and correspond direct with Tony Beauchamp, Policy Division, Inland Revenue, Somerset House, London WC2. I should like to have copies of any correspondence.
4.
Commercial Department will wish to bear in mind that we went through the sane procedures after the 1973 talks and the Chinese did not respond with details of taxes. If we end up this time with an Air Services Agreement that will be implemented, I think they might be more positive, because I suspect that it is anxiety about taxes on them in the UK, rather than altruism towards us that is uppermost in their minds. Their recent Air Services
Agreement with the Netherlands includes a tax provision.
02689
(P G F BRYANT)
CAIR/Department of Trade
Peking
26 May 1979
DEPARIMENT
OF
TRADE
- 3 JUL 1979
CAIR
1 A