contract with the Minister of Finance in accordance with a decree of October 16, 1945, is guaranteed the right to withdraw profits not in excess of 15 percent per annum of the amount invested, and to withdraw capital at the rate of 20 percent or 30 percent per year, depending upon the type of investment. There is also an "extra-legal" exchange market in Bolivia in which it is understood that some exchange may be acquired for purposes other than those designated in the monthly directives of the central bank to commercial banks regarding the sale of exchange.

The above provisions do not in practice affect remittances of profits, etc., by large mining enterprises, all of which are foreign-owned. This is due to the fact that such enterprises are required to return to Bolivia only specified portions of the foreign exchange proceeds of their exports. The remainder may be retained abroad for use in the payment of expenses, interest, dividends and other items customarily payable in foreign currency. Amounts not used for these legitimate purposes are required to be returned to Bolivia.

In recent years the companies have been charged by members of the Bolivian Congress with failure to return to Bolivia the amounts of exchange that should have been returned, and action to force such return has been urged. On August 26, 1947, the Minister of Finance was reported to have issued a resolution requiring the large mining interests to submit within 30 days an accounting for about $237,000,000 in foreign exchange they have been permitted to retain abroad since 1939. Competition with Government-owned companies. So far as is known the Bolivian Government does not own any important business undertaking except YPFB, mentioned above. That, however, is a monopoly. Nationalization.-At the end of 1936 the Bolivian Government established YPFB (Yacimientos Petroliferos Fiscales Bolivianos) as the official agency of the Government in the petroleum field and granted it a monopoly in the exploitation of petroleum and derivatives. This was followed early in 1937 by the expropriation of the Standard Oil Co. of Bolivia, a subsidiary of the Standard Oil Co. of New Jersey, and since that time all Bolivian petroleum operations have been controlled by the YPFB. Recently there have been indications that the Bolivian Government would permit foreign private capital to operate petroleum concessions in Bolivia, but to date there are no foreign companies in the field, although a contract with the Superior Oil Co. of California for the development of petroleum reserves in the Bolivian Chaco region is now under consideration by Bolivian authorities. During 1947 the Bolivian Congress considered measures authorizing the nationalization of the mining industry, largely foreign owned, and of the foreign owned railroads, without, however, reaching a decision on these matters.

Brazil

Right to do business. For general business operations, there are in Brazil no restrictions with reference to the nationality of the owners or partners of business firms or with reference to the nationality of shareholders of Brazilian corporations. In the case of specific lines of business, restrictions did exist, but certain of these were modified. by the new Brazilian constitution, which was promulgated in September 1946. The former constitution provided that authorization to engage in mineral exploration and development could be granted

only to Brazilian citizens or to companies formed entirely of Brazilian citizens, whereas the new constitution permits such authorization to be granted to Brazilian citizens or to companies organized in Brazil. The petroleum law and mining code are at present under revision in order to give effect to this provision of the new constitution, and until their completion it is not known under what terms foreign capital will be permitted to engage in petroleum development or in new mining enterprises. (Mining companies in which foreign capital participated are permitted to operate if they were in operation prior to the adoption of the 1934 constitution.) The provisions relating to water power were similarly liberalized by the new constitution.

Other exceptions to the general rule that there exists no restriction as to the nationality of owners or shareholders of a business relate to aviation operating companies, shipping companies, journalistic and radio-broadcasting enterprises, insurance companies, companies manufacturing pharmaceutical products, and companies owning property located on the borders of the country. In each case special legislation is applicable, affecting the proportion of stock which must be owned by Brazilians, and other matters.

Taxation. In general, juridical entities which are wholly or partially owned by foreigners are taxed at the same rate as their counterparts that are wholly Brazilian owned. However, the Brazilian Treasury has ruled that in the case of a foreign corporation operating with a branch in Brazil, the nonresident's 10 percent income tax is payable on all profits shown by the annual balance sheet and profitand-loss account of the branch, whether or not these profits are remitted abroad to the head office; this is on the theory that the profits belong to the foreign corporation even though it chooses to allow them to remain in Brazil. The 10 percent tax is in addition to the 8 percent income tax assessed against the branch as a juridical entity operating in Brazil.

In the case of individuals residing abroad who hold investments in Brazil, any income accruing to them, regardless of its nature, arising from Brazilian sources, is subject to deductions of income tax at the source at the rate of 10 percent. It is difficult to compare this rate with that applicable to income accruing to resident Brazilians and to other individuals residing in Brazil for more than 12 months. A proportional rate is assessed, according to the source of the income, on annual incomes of over 24,000 cruzeiros (about $1,200), and in addition a tax at a progressive rate is assessed after deductions for family maintenance, interest, accidental losses, contributions, etc.-the progressive rate varies from 1 percent on taxable income between 24,000 and 30,000 cruzeiros (about $1,200 to $1,500) to 30 percent on taxable incomes of over 700,000 cruzeiros (about $35,000).

Labor. Two-thirds of all employees of commercial and industrial firms must be Brazilian and two-thirds of the entire pay roll must be paid to Brazilians. (The main establishment is considered as a unit and branch offices as separate units.) Directors of sociedade anonima companies, elected by the stockholders, are not considered to be employees for the purpose of this law. However, managers of companies are considered to be employees, unless they are in the above category or in cases where the manager is also a partner or shareholder and the capital contributed by him exceeds 30,000 cruzeiros (about $1,500 United States currency).

If a Brazilian and a foreigner are performing similar duties, the Brazilian cannot receive remuneration less than that given the foreigner. Government control is effected by requiring an annual report of all employees indicating their positions or duties. Moreover, each firm must maintain for inspection in its office a labor registry book legalized by the Government.

The Brazilian Constitution in effect until September 1946, when the present constitution was promulgated, restricted the practice of the professions to Brazilian citizens. The new constitution provides that the practice of any profession shall be free, in accordance with such conditions of capacity as may be established by law. However, the regulatory laws have not yet been passed by the Brazilian Congress.

Foreign exchange controls. For several years the only control over such remittances was approval of each transaction by the Bank of Brazil, the granting of which depended upon the available supply of exchange. At present the following additional conditions prevail:

(1) After providing for requirements of the Federal Government exchange accruing to Brazil is sold in accordance with a priority schedule consisting of five categories. Essential imports constitute the first category in this schedule, and interest, profits, royalties, and capital, the second category.

(2) The remittance of interest and profits in respect of any one year is limited to an amount equal to 8 percent of the capital registered with the authorities, plus 20 percent of the total of interest and currently declared profits in excess of 8 percent of registered capital. The remaining 80 percent may be remitted in four equal annual installments. The reexport of registered capital is permitted in five equal annual installments, subject to changes which changes in the exchange market may necessitate. The regulations make no provision for unregistered foreign capital but registration may be effected at any time.

Competition with Government-owned companies.-The Brazilian Government has granted duty-free entry or tariff reductions for machinery, apparatus, or supplies imported by specified industries which it desired. to foster. Such an exemption was granted to the National Steel Mill (the Government owns the majority of the stock of this company) and in September 1946 the exemption was extended to materials, including railway and steamship equipment required for the company's coal mines in Santa Catarina. This legislation also exempted the company from the payment of consumption tax on its imports and from the payment of customs and fiscal fines. It is believed that this is the first time that any organization in Brazil, whether or not owned or controlled by the Government, has been granted a blanket exemption from fines. Another decree law, also issued in September 1946, declared the National Steel Mill a public utility and exempted it from taxation, including property and income taxes as well as taxes on products and byproducts of its manufactures that it sells. The exemption from the consumption and income tax is to cease when the company distributes a minimum annual dividend of 6 percent to the holders of its common and preferred stock during three consecutive years.

Nationalization.-There is no nationalization movement in Brazil at present in the sense of the Brazilian Government taking over complete operation of any of the economic activities of the country.

The Government operates certain of the railway systems of the country (the management of all lines, based on mileage, is approximately as follows: Federal Government, 40 percent, state governments, 30 percent, private companies, 30 percent); Government participation in railway operations originally developed through force of necessity, when concessionaires failed to raise the required capital, and other railway systems later fell into the hands of the Government as a result of financial difficulties of the operators. Government participation in shipping developed along similar lines; the Government-owned Lloyd Brasileiro is by far the principal shipping company of Brazil, and the Government also operates a shipping service in the Amazon Valley.

The Government has, since the beginning of World War II, participated in the financing of enterprises for which Export-Import Bank loans were obtained. These are the National Steel Mill at Volta Redonda, the Cia Vale do Rio Doce and the Itabira iron ore development, the National Motor Factory, near Rio de Janeiro, and the new caustic soda and soda ash plant to be constructed at Cabo Frio. In addition, the Government has financially participated in the formation of a company for water power development in the Sao Francisco Valley and a refinery in Bahia.

Regulatory agencies, commonly known as "defesa" institutes, have been established to rationalize the production and improve the marketing of coffee, cacao, mate, sugar, tobacco, rice, and a number of other products. The decrees governing these organizations ordinarily extend to the industries something approaching a public utility type of regulation, although they leave to the representatives of the industry themselves considerable latitude in the formulation of the controls instituted. Governmental authority is employed to supervise, enforce, or veto the regulatory measures.

Chile

Right to do business.-There are no Chilean laws that restrict in any way the nationality of owners of shares, or of partners or other interest holders in business firms. However, firms domiciled outside the country are barred from certain kinds of business activity, including insurance; electric power production and distribution; telegraphic, cable, and radio communication; and railway construction and operation, but foreign-owned companies to engage in these businesses may organize under Chilean law.

Taxation. While no distinction is made between foreign and domestic firms in the so-called "basic" Chilean income tax law, foreignowned companies operating in Chile are subject to an "additional" assessment, which amounts to 13 percent of their incomes. Income from mining operations, which are carried out principally by foreign firms, are subject to special rates of taxation, substantially in excess of the general income tax. For example, copper companies-overwhelmingly foreign-owned-pay taxes totalling 36 percent of their taxable income, and, in addition, through the use of an artificial exchange rate, pay what amounts to a disguised tax of about 37.5 percent of their total cost of operations in Chile. The Chilean Government also participates in the gross income of copper companies through a tax based on the difference between 10 cents (United States) per pound and the actual New York price of copper. The tax is applied as follows: If the New York price exceeds 10 cents per pound by 14 cents or less,

the entire excess accrues to the Chilean Government; if by more than 14 cents but by not more than 21⁄2 cents, all of this addition accrues to the companies; and if in excess of 21⁄2 cents the excess is divided equally between the producers and the Chilean Government.

Labor regulation.-The Chilean Labor Code provides that at least 85 percent of the employees of a private enterprise employing more than 5 persons must be citizens of Chile, and that at least 85 percent of the pay roll must be paid to Chileans. The restriction does not apply to technical experts who cannot be replaced by Chileans.

Foreign exchange controls. Purchase of exchange at the rate genally applicable to commercial transactions (31 pesos per dollar for several years) requires official authorization, the granting of which depends upon the availability of exchange. The supply is currently so limited that little if any is being sold for dividends, etc. However, foreign-owned firms are not forbidden to buy exchange for these purposes in the free market, where the rate is substantially higher than in the official market. It has recently been as high as 55 pesos per dollar.

The foreign-owned mining companies that operate in Chile are not affected by these restrictions since of the proceeds of their exports they are required to sell in Chile only enough foreign currency to obtain the pesos for meeting their necessary expenditures in Chile. The rate at which they sell such exchange, however, is fixed at 19.37 pesos per dollar as compared with 31 pesos per dollar paid to other exporters.

Competition with Government-owned companies.-The Chilean Government has been active in the development of industries, principally through its agency, the Fomento Corporation. The fields in which it has participated actively include mining, electric power and other basic industries, as well as large-scale purchasing, notably agricultural machinery. A large part of the Government's activity, however, has been in the development of enterprises, which normally would remain dormant for lack of private investment capital. The Chilean Government likewise has established virtual monopolies over the sale and export of nitrates, and over domestic petroleum production and distribution.

Nationalization.-There are several instances of nationalization in Chile, the outstanding of which are the Government's acquisition of the country's railroads and municipal acquisition of certain street railway and electric power interests. While it is not improbable that most, if not all of the public utilities will eventually be publicly owned, there does not appear to be a trend toward nationalization of other existing industries at the present time.

Colombia

Right to do business.-There are no restrictions regarding the nationality of owners of shares or partners in Colombia except in the case of airline companies. Partners or shareholders may all be foreigners or Colombians without distinction or discrimination. In the case of airline companies Law 89 of 1938 requires that 51 percent of the shares must belong to Colombian nationals or to entities controlled by Colombian nationals. Firms owned wholly (except air lines) or partly by foreigners, irrespective of the country or organization, may engage in any kind of legal business as provided in the contract or organization.