and estate taxes have removed most of the tax difficulties encountered by American investments and business interests in the United Kingdom. The United States also has conventions similar in scope and purpose with Canada with respect to Dominion income and estate taxes. Conventions for the avoidance of double income and estate tax conventions were signed on December 13, 1946, and April 10, 1947, respectively, by the United States and the Union of South Africa, but the ratification procedures have not as yet been accomplished.

The income tax laws of both Australia and New Zealand have broad definitions of what constitutes doing business in their jurisdictions so as to render nonresident firms liable to income tax on the profits made from sales. When an American firm makes sales in Australia or New Zealand through traveling salesmen, commission agents, or other intermediaries who are "instrumental" in obtaining orders, whether or not concluding contracts on its behalf, such firm is liable to tax on the profits therefrom. Consequently, only direct sales through mail or cable orders or to distributors who buy and sell in their own name are exempt from tax.

Section 19A of the Indian Income Tax Act stipulates that the principal officer of every company shall furnish the names and addresses of its shareholders, and section 3, explanation 3, provide that "a dividend paid without British India shall be deemed to be income accruing and arising in British India to the extent to which it has been paid out of profits subjected to income tax in British India." Although this provision has apparently not been heretofore enforced against American companies operating in India only through registered branches, one American company, at least, was requested to supply the list of its shareholders as a condition to the registration of a branch it sought to establish in India. After representations were made, the finance member issued instructions that this requirement should not be applied, and indicated that an amendment to the tax law would be recommended.

While a nonresident is made liable to Indian income tax only on income derived from sources in India, the total world income of such taxpayer is made the basis for determining the rates of tax to be applied to that Indian income. As a result a nonresident may be subject to a substantially higher rate on his Indian income than would be indicated by the tax rate schedules.

Labor.-Directors and employees of managerial status of branches or British subsidiaries of American firms have in general encountered little difficulty in obtaining permission to enter and remain in the United Kingdom. In the case of technical employees it is necessary to establish that British subjects with the necessary qualifications are not available, and when permission to enter is granted it is usually stipulated that they may remain only so long as it may be necessary for these employees to train local employees to do the work. The bringing in of unskilled labor is generally not permitted. The Dominions have, in general, applied similar regulations.

The Canadian contract labor regulations of 1929 established practices similar to those described in the preceding paragraph, but due to the current scarcity of numerous classes of labor in Canada an order in council dated April 11, 1947, has suspended the 1929 regulations.

Foreign exchange controls.-Exchange controls are in effect in the United Kingdom and all the Dominions. Excluding the Dominion of Canada, the regulations and policies governing exchange transactions are similar in all these countries, subject only to minor variations. resulting from particular local conditions. In order to transfer funds for the purchase of goods or services it is necessary for the resident remitter to obtain a permit from the local exchange control authorities, unless the recipient is also a resident in a sterling area country. This requirement extends as a general rule to payments of interest, profits and dividends, whether by individuals or firms. The customary policy which has been followed for some time is to permit transfers of this type to be made on application, subject only to the possible submission of reasonable proof that the transfer represents a bona fide transaction and the funds involved accrue from current operations. Transfers of capital, on the other hand, are permitted under very special circumstances as determined by the merits of each case presented to the authorities. Sums realized from the sale of capital assets are, therefore, ordinarily "blocked," but it is the policy of the authorities to permit reinvestment of these sums and to allow returns to be transferred as they accrue. By following a prescribed form nonresidents purchasing securities in London with newly remitted funds may sell these securities subsequently and transfer the proceeds in the same currency as the original funds were transmitted. Although royalty and rental payments are permitted under prewar agreements, new licensing or leasing arrangements between foreign and domestic companies must be approved in order that transfer of payments arising therefrom may be made without difficulty.

Although the Union of South Africa is a member of the sterling area and has an exchange control system similar to those of the United Kingdom, Australia, New Zealand, and other parts of the area, it has in practice been able by virtue of its large gold production to apply the controls without as rigid supervision.

The Canadian exchange control mechanism differs in several respects from that of the United Kingdom or its sister Dominions. Canada has not, of course, been a member of the sterling area, and has not shared in the freedom of monetary transfer in transactions. with that area as have the other Commonwealth countries. The movement of funds between Canada and the United States is controlled, but all current transactions not otherwise prohibited are eligible for payment in official exchange, that is, United States dollars. are supplied at the established rate of exchange by the Canadian authorities. Thus, interest, profits and dividends may be remitted at the official rate. The control over capital transfers is more complex, but under present regulations new capital investments other than in bonds and debentures by nonresidents may subsequently be liquidated and transferred if originally registered with the authorities at the time the investment was made. The authorization to liquidate given by the authorities does not carry with it access to official exchange and the proceeds may be transferred only in Canadian dollars. This situation has given rise to a "free" market in the United Stateswhere Canadian dollars are sold at a varying discount against United States dollars. Since the Canadian dollars so acquired cannot be used to purchase Canadian goods for export, the chief sources of demand for them are tourists and investors wishing to purchase Canadian securities or real estate.

Nationalization.-The nationalization program in the United Kingdom has been applied to the Bank of England, the coal mines, inland transportation systems, air services, and cable services. Foreign investments in the nationalized industries were apparently negligible, and equitable compensation to private investors, whether British nationals or foreigners, has been provided for in the pertinent legislation. The nationalization of the electric and gas industries is programed for consideration by the current session of Parliament, and public ownership of the iron and steel industry is on the agenda for future action.

The Cabinet of the Commonwealth has submitted to the Australian Parliament a proposal to nationalize all private trading banks. Since considerable controversy has resulted over this issue, the ultimate outcome of the proposal is uncertain.

Eire

Right to do business.-The British Companies Act in effect on December 6, 1921, was by section 73 of the Constitution of the Irish Free State, and by the Adaptation of Enactments Act of December 20, 1922, applied in the then Irish Free State. There have been no subsequent enactments to change the company law then in effect, so that there are no discriminatory provisions in the Companies Act with respect to the incorporation or registration of companies in Eire. Under the Control of Manufactures Act, 1932, as amended, a foreign controlled manufacturing business may not be established in Eire without a license from the Minister of Industry and Commerce; if it was established before 1932, it cannot extend the scope of its manufacturing activities without such license. The Minister may, at his absolute discretion, grant a license to do all the things specified in the application or to do some or only one of the things specified or refuse to grant a license.

Since July 2, 1934, it has not been lawful for any company to engage in manufacturing in Eire without this special license unless 51 percent of its issued shares are owned by a national of Eire or by a qualified body corporate. A qualified body corporate (or holding company) must have at least 51 percent of its shares held by qualified persons (i. e., nationals of Eire or ordinary residents of Eire for 5 years before July 2, 1934), at least two-thirds of any class of shares carrying voting rights must be similarly held and a majority of the directors (other than a full-time managing director) must be nationals of Eire. Individuals cannot engage in manufacturing without a special license unless they are qualified persons.

The same act empowers the executive council to declare the manufacture of a particular commodity to be a reserved commodity which no one shall be permitted to engage in without a license, subject to such conditions as the Minister may attach to it. The purpose of this part of the act is apparently to encourage industries hitherto nonexistent in Eire by granting a monopoly position or assurance of limited competition.

Belgium

EUROPE

Right to do business.-No known law exists in Belgium to prohibit the right of foreigners to establish and operate business concerns or to prohibit the manufacture of merchandise, but decree laws have been

instituted to restrict the activities of foreign corporations and the employment of foreigners.

A decree law was passed in 1923 limiting the acquisition of realty and the conclusion of leases by foreigners (except those governed by Belgian law) to 9 years without special authorization of the Ministry of the Interior.

In order to own or lease property for a period greater than 9 years, the foreign company is required to have a Belgian president, Belgian manager, Belgian managing directors and more than 50 percent of its board of directors of Belgian nationals, and its principal place of business in Belgium.

The Belgian Government furthermore reserves the right to reject or prohibit the establishment of foreign branch factories, subsidiaries, and the like, if such establishment meets with the disapproval of Belgian trade associations. This was exemplified by the objections of the Belgian glass industry on the grounds that "There is no room for a competitor," when the Pittsburgh Plate Glass Co. in 1947 applied for the establishment of a branch factory.

By a decree of 1935 the Belgian Government reserves the right to oppose the operation of a foreign company or the extension of an already existing foreign company, if the Belgian Government deems it inexpedient for the country's economy.

The Belgian Government reserves the right to request that a certain percentage of locally manufactured goods be used by a foreign company. For example, by a gentlemen's agreement the United States automotive assembling plants have agreed to utilize at least 40 percent of locally made automotive parts and accessories in the assembling of all automotive vehicles.

Taxation. A 1938 law gave the Belgian Government the right to assess a local company on any profits realized directly or indirectly through it by a foreign controlling company of the local concern. Furthermore, the company is required to deposit with the Belgian tax authorities guarantee for payment of taxes, and is required to file with its tax declaration the latest balance sheet and profit-andloss account not only for the local branch company or subsidiary but for the parent or controlling company.

Because of the difficulty inherent in determining the profits of foreign firms operating branches in Belgium, the tax authorities assessed these firms on an arbitrary basis if their profits fell below the average earnings of local firms of a similar nature.

Labor regulations.-A 1930 decree requires foreigners entering the country for employment to obtain an authorization from the Ministry of Justice, an identity card, and to submit an employment contract from an employer established in Belgium. By a 1939 decree all foreigners who apply for employment in Belgium must pay 500 francs upon application for their identity card which in addition is subject to a stamp tax.

Foreign exchange controls.-Foreign exchange is under strict control. Present indications are that current earnings are being transferred but no export of capital seems possible.

Competition with Government-owned companies.-The merchant marine is Government-owned. Railroads and communications are semiprivate monopolies.

Nationalization.-Belgium has not followed a postwar policy of

nationalization.

Czechoslovakia

Right to do business.-Before World War II foreign corporations doing business in Czechoslovakia were restricted by requirements for special licensing (particularly as far as acquisition or lease of real estate in frontier zones was concerned), for special reports, requirements for the employment of citizens in key positions, certain regulations referring to the employment of foreigners and restrictions on residents in frontier zones. There were also special provisions restricting the operations of foreign insurance companies in Czechoslovakia. Although all these regulations are probably still in effect, their importance is minimized through the nationalization legislation passed after the war, which is dealt with below.

Taxation. There appears to be no evidence of discriminatory taxes against foreign enterprises.

Labor regulations. According to 1936 legislation, the employment of foreigners in industry was subject to license.

Foreign exchange control.-Tight foreign exchange control is maintained. Since all major industrial investments have been nationalized as outlined below, the question of transfer of capital and earnings does not arise except in minor instances.

Nationalization and competition with Government-owned companies.The law provides for nationalization of key industries, notably power, mining, iron and steel, chemical, banks and insurance, and of all industries if the number of employees exceeds 150 to 500, depending on the industry. Railroads, communications, motion-picture, tobacco, and salt industries are Government monopolies.

In an exchange of notes with the United States Government in November 1946 the Czech Government pledged itself to make adequate compensation for nationalized American-owned property. Negotiations for the implementation of this undertaking have been carried on, but so far have not been brought to a conclusion. According to press reports it has been an obstacle to the negotiations that no agreement could be reached concerning the treatment of claims held by recently naturalized American citizens who had been Czechs. Denmark

Right to do business.-A foreign stock company which in the opinion of the Minister of Commerce is lawfully organized in its own country may do business in Denmark, but may not conduct a retail business. The fact that the company is foreign and its nationality must be indicated in its name. The usual formalities have to be complied with.

As far as companies organized under Danish law are concerned, members of the board of directors who reside abroad and who are not Danish citizens can sign in the name of the company only collectively with persons residing in Denmark. Except in the case of companies which bore their present name before January 1, 1918, a Danish company may incorporate in its name the name of a Danish locality or of Danish nationality only if all the members of the board are either citizens or have resided in the country for the last 5 years. Taxation. The Danish tax law treats a foreign corporation as an individual. The consequent difficulties make it advisable for a foreign corporation to operate in Denmark through a Danish subsidiary.

Labor regulations.-With the exception of the restrictions on foreign directors of corporations, there is no evidence of labor regulations