Comparative Law Series

The purpose of the association is to provide immediate cash payments to widows or dependents of associate members upon their deaths. The association now has 2,580 members. The membership is in three general classifications (1) persons under 35 years of age, (2) persons between 35 and 50 years of age, and (3) persons over 50 years of age, and is composed of Panama Canal and Panama Railroad employees, retired personnel, employees of the United State Army and Navy. The cost of membership is very low. The report shows the average cost per year to be around $8 for Class 1, $11.93 for Class 2, and $17.78 for Class 3.

Elsewhere in this number reference has

been made to con

tributions to legal literature which have recently come out of Latin America. The Division of Commercial Laws Library now acknowledges the gift by the author of a copy of a work of more than a thousand pages made in this country on the laws of one of the vaster jurisdictions of Latin America. The Compendium of the Laws of Mexico, by Joseph Wheless (Thomas Law Book Company, St. Louis), familiar to American business men and lawyers specializing in Mexico of a generation ago (1910), has now been completely rewritten and streamlined. The work covers in detail the Federal Constitution, the Civil Code of the Federal District, the Code of Commerce, Civil and Mercantile Procedure, Judicial Organization and Justice, Foreigners, naturalization and Colonization, Foreigners and Property Rights, Commercial Corporations, Commercial Instruments, Civil and Penal Responsibility, Mining, Petroleum, Stamp Tax, Notarial Law, Insurance, Industrial Property and Copyrights, Money, Weights and Measures, etc., and contains a number of useful forms with their translation. It, too, should encounter a generation of usefulness, like its predecessor.

SPECIAL BULLETIN

ITALY IMPOSES EXTRAORDINARY TAX LEVY ON PRIVATE CONCERNS

As is known, devaluation of the lira in October, 1936, was taken advantage of by the Italian Government as motivation for the enactment of two measures designed to furnish extraordinary revenues for financing the armament program and for the valorization of the territory acquired in the East African war. On the theory that devaluation contributed an unearned increment to property valuations, the Government proceeded to the recapture of a portion of this increment by assessing extraordinary taxes, first on real estate and subsequently on joint-stock companies, according to the Office of the American Commercial Attache, Rome.

Hitherto unaffected by the extraordinary taxes have been private concerns (not organized with share capital) engaged in industrial and commercial business. This gap is now filled and the cycle of extraordinary tax levies is made complete through the approval by the Council of Ministers on November 7, 1938, of a measure establishing an extraordinary tax on capital invested in "industrial and commercial concerns operated by private contributors and by non-share societies."

The text of the measure has not yet been published. However, from official explanatory comment published in the Italian press, some of the outstanding features seem to be as follows:

commentary on

Concerns Affected. According to the explanatory the new tax published in the press, it is applicable to "private industrial or commercial firms registered for the year 1938 in the income tax (Ricchezza Mobile) rolls for incomes of category B" (1.e., incomes from capital and labor combined), provided the firms were existing on October 5, 1936 (date of the devaluation of the lira). Firms established subsequently to that date are exempted, since they cannot have enjoyed an increase in property valuations attributable to devaluation.

Also exempted are firms of not more than 10,000 lire income, the presumption being that income up to this amount is derived in only minor degree from the small capital involved and represents essentially the product of labor. The liberality of this 10,000 lire exemption is stressed in press commentary on the tax, attention being called to the fact that the exemption limit is five times that (2,000 lire) which is applicable in collection of the income tax. As a result of the 10,000-1ire limit, it is stated, the new tax will fall upon not more than approximately 120,000 firms out of around a million taxpayers having incomes of industrial or commercial character.

Scale of Deductions for Determining Taxable Base. On the theory that as income increases the part attributable to human labor gradually diminishes, the measure provides a scale of deductions (details not yet published) from the income used for establishing the taxable base. The scale of deductions is differentiated according to the nature of the industrial or commercial incomes and the proportions of fixed or circulating capital. Minimum deductions are stated to be 30 and 45 percent respectively for industrial and commercial incomes exceeding

50,000 lire; maximum deductions, 55 and 70 percent respectively.

Determination of Taxable Capital. The above-mentioned deductions having been made, the remaining income is capitalized on the basis of 8 percent to arrive at the taxable capital presumed to be invested in the concern. Press commentary calls attention to the more favorable treatment thus accorded than was applied in the previous measure affecting real estate, valuation for the latter having been derived by capitalizing on the basis of 5 percent.

Rate of the Tax. As compared with previous 5 percent levy on real estate and the 10 percent levy on the capital of joint-stock companies, the new tax on private concerns is set at 7.5 percent of the taxable capital.

However, it is expressly stipulated that the amount to be paid shall in no case exceed five times the income (Richezza Mobile) tax due for one year.

To Be Paid in Installments, Beginning March 10, 1939. As in the measures affecting real estate and joint-stock companies, this is a one-time tax; i.e., a capital levy. However, provision is made for its payment in installments- by 18 bi-monthly payments over a period of three years, the first installment to be due March 10, 1939. A longer period than three years is mentioned as allowable where the tax is in the higher brackets. Details on this point have not as yet been released.

Privilege of Liquidating Tax in Advance. Taxpayers so electing may pay the tax in advance of the installment maturity dates, and in such cases they are entitled to "credit of compound interest at the rate of 8 percent for the number of the annual installments paid in advance. The exact arithmetical working out of the provision is not made clear in the information currently published.

To afford financing facilities for advance liquidation of the tax, loans may be granted by the banking institutions against bills of exchange of the taxpayer. This provision applies when the sums involved exceed 20,000 lire. It will be remembered that analogous financing assistance was provided for the payment of the 10 percent tax on joint-stock companies.

Estimated Amount of the Levy. Official comment on the new tax contains the statement that it is motivated more by considerations of equitable distribution of taxation (the class now affected not having been covered by the previous extraordinary levies) than of the yield to be derived by the Government. The latter is estimated at 1,200 million lire.

THE DIVISION OF COMMERCIAL LAWS IS READY TO

SUPPLY YOU WITH INFORMATION ON FOREIGN BUSINESS LAWS AND TAXES

LEGAL INFORMATION IS A BUSINESS NECESSITY

LIST OF NOTICES

PUBLISHED BY THE DIVISION OF COMMERCIAL LAWS

IN COMMERCE REPORTS

GENERAL

Commerce Reports for November 5, 1938

BELGIAN CONGO

CHILE

MEXICO
PERU

GENERAL