TAX ON PROFITS

Otago Daily Times, Issue 23224, 23 June 1937, Page 9

TAX ON PROFITS

ADOPTION OF MEASURE QUESTION OF OVERSEAS TRADE DISADVANTAGES POINTED OUT (United Press Association) (By Electric Telegraph—Copyright) LONDON, June 21. (Received June 22, at 5.5 p.m.) In the House of Commons, the Home Secretary (Sir John Simon), in moving the adoption of the new tax on profits, explained that it would be charged on the profits of trades and businesses carried on in the United Kingdom, also on those carried on outside the United Kingdom and by those resident in the United Kingdom. Sir Alan Anderson objected to the application of the tax to companies trading abroad with shareholders throughout the world, simply because they had their headquarters in London. It was important to encourage business people operating abroad to locate their headquarters in Britain.

Mr R. J. G. Boothby raised the point whether the dominions would accept the tax as part of production costs, or would the sum paid in tax be subject to full income tax in the dominions. If so, these companies would be at a serious disadvantage in relation to competitors who had no offices in London or did not operate overseas. The resolution was passed by 231 votes to 98. SCOPE OF THE TAX METHOD OF ASSESSMENT PROVISION FOR REMISSION A tax at 5 per cent, for companies and 4 per cent, for businesses carried on by individuals will be charged on profits arising in the five years' period from April last. The tax will not apply to professions. Subject to necessary adaptation the profits will be determined on the same lines as for purposes of income tax.

The tax will not be chargeable when the profits do not exceed £2OOO. Where they exceed that figure, but do not exceed £12,000, an abatement will be allowed of onefifth of the amount by which the profits fall short of £12,000. Provision will be made for remission of the tax, whole or part, in cases where the commissioners for special areas certify that it is expedient for the purpose of establishing industrial undertakings in those areas that relief be given.

The tax will be deducted,in computing the profits of trade or business for the purposes of income tax. No calculation of capital will be necessary for any purpose connected with the tax.

It is estimated that in a full year the tax may be expected to produce £25,000,000.