In

is a building tax assessed by the various local governments. Tokyo the Prefecture in 1937 assessed a rate of 6.4 percent of the rental value to which various municipal surtaxes were added equivalent to 487 percent of the basic tax, so that the total building tax in Tokyo was equivalent to 38.02 percent of the rental value. It should be noted that the assessed rental value may be considerably less than the actual return from the property.

TAX ON CORPORATE CAPITAL

The Juridical Persons' Capital Tax Law No. 4 of 1937 levied an annual tax of 1 per 1,000 on the paid-up capital and reserves, but the rate was increased to 1.2 per 1,000 by the China Incident Special Tax Law. According to the regulations (No. 5 of 1937) the amount of capital of Japanese branches of foreign companies is to be calculated by multiplying the total amount of capital by the ratio of the value of the assets in Japan to the total value of the assets; should the use of the ratio of values of assets be found inappropriate the calculation may be made by using the ratio of receipts or of incomes or some other suitable method.

SECURITIES TRANSFER TAX

The Negotiable Securities Transfer Tax Law No. 7 of 1937 imposes a tax on the transfer by purchase, exchange, gift, et cetera, of securities. The tax rates are: Class I, when securities are purchased by brokers, 0.01 percent for National Government bonds and 0.02 percent for other securities; Class II, transfer other than Class I, (a) in exchange transactions 0.02 percent for National bonds and 0.04 percent for other securities, and (b) in all other cases 0.04 on National bonds and 0.08 percent for other securities. The tax in all cases may not be less than 1 sen, a fraction of 1 sen being counted as 1 sen.

OTHER NATIONAL TAXES

Other taxes levied by the National Government include succession of death duties, exchange or bourse tax, mining taxes, various excise or commodity taxes, stamp duties, nominal in amount, on a large number of commercial documents, and registration fees for the entry of various commercial matters in public registers.

LOCAL TAXES

The prefectures and municipalities obtain a large part of their revenue through the levying of surtaxes on several National taxes, principally the income, business profit and land taxes. While normal surtax rates are limited by law, they may be more or less increased with the consent of the National authorities. Such rates vary in the different localities and also from year to year in each locality. The local governments, with minor exceptions, may not impose surtaxes on the additional and special taxes levied under the provisions of the Temporary Tax Increase Law and the China Incident Special Tax Law, so that the local surtaxes on the National income and business profit taxes are imposed on the basic rates. No additional taxes may be levied on Class II income or on the special excess profits tax by the prefectures and municipalities. The Tokyo surtax in 1937

on the ordinary income tax amounted to 45 percent, and the business profit surtaxes, prefectural and city, totaled 172.5 percent. For example, the business profit tax, payable by corporations, totaled 9,865 percent, including 4 percent for the National tax and 5.865 percent (172.5 percent of basic 3.4 percent rate) for prefectural and city taxes in Tokyo.

Business taxes are levied by the local governments on those occupations and businesses which are not subject to the National business profit tax. Other local taxes include house taxes, special land taxes, household taxes, et cetera.

SOURCES

A Survey of Some Jabanese Tax Laws (1931) by E. V. A. de Becker. Taxation of Foreign and National Enterprises Vol. III, (League of Nations, 1933) ·

A Selection of Japan's Emergency Legislation (1937) by William J. Sebald.

Jaban - Manchoukuo Year Book 1938 (November, 1937).

Reports from the Office of the American Commercial Attache, Tokyo.

LIST OF NOTICES

PUBLISHED BY THE DIVISION OF COMMERCIAL LAWS
IN COMMERCE REPORTS

GENERAL

INTERNATIONAL

NORWAY

PANAMA

URUGUAY

GENERAL
FRANCE

FRANCE
GERMANY
GREECE
MEXICO

GENERAL
CHILE

Commerce Reports for August 6, 1938

Patents in Brazil

Latvia, Lithuania, Estonia, Negotiable Instrument Convention

Companies, Reserve Funds for Emergencies

- Insurance, Taxation, 2 Percent Tax on Premiums Upheld

- Corporations, Bookkeeping Requirements

ECUADOR

GREECE

STRAITS

SETTLEMENTS

MORTGAGE MORATORIUM IN CUBA

By Commercial Attache Albert F. Nufer, Habana

As a result of the then deepening depression caused by the critical condition of the raw sugar market, which brought about an alarming increase in the number of foreclosure proceedings, the Cuban Mortgage Moratorium Law of April 3, 1933, was enacted.

The above law declared a moratorium for the payment of capital or amortization installments thereof and interest of railroad, sugar mill and industrial mortgages and mortgage bonds; on certain obligations (notes against municipal loans); "cedulas" (notes against mortgages) or mortgage bonds issued by the Territorial Bank of Cuba under the Law of July 20, 1910; on obligations secured by the mortgage of urban or rural property for the payment of principal or installments in amortization thereof and on the payment of that portion of the interest agreed upon in the contract in excess of 4 percent in respect of urban property and 2 percent in respect of rural property. The law also, under certain conditions, reduced by 35 percent. the rent of rural properties leased for the cultivation of cane, and the mortgage was extended to loans secured by pledges of bonds, obligations, "cedulas" or other evidence of indebtedness subject to the moratorium established by the law.

It provided that judicial proceedings filed prior to the publication of this law in exercise of rights suspended by virtue thereof were to be detained in the status in which they were upon such publication and could be revived after July 1, 1935.

It also provided that amounts not acquitted on July 1, 1935, as a result of the moratorium, were to remain secured by the mortgage or pledge granted, to the prejudice of third parties, in the terms fixed by the Mortgage Law and other existing legislation, and were to be payable by the debtors in three equal annual installments, as follows: one on July 1, 1935; the second on July 1, 1936; and the third on July 1, 1937.

The provisions of the above law became effective on April 4, 1933, and were to expire on July 1, 1935. Before its expiration, however, Decree-Law No. 412 of August 14, 1934, was promulgated, which DecreeLaw modified the original moratorium and extended it to June 30, 1942. A translation of the salient features of Decree-Law No. 412 is given herewith as, in view of its many ramifications, it would be impractical to attempt to summarize it briefly:

PART ONE

A moratorium is granted owners or lessees of sugar mills upon mortgages or loans guaranteed by real property or securities. (Article I.) To be entitled to the advantages of this moratorium the debtor is required to render payments in accordance with the following schedule:

1. Within the last 15 days of July 1936: 2 percent of the gross value of sugar produced by the mill during the 1936 crop, if the average price of sugar for that crop is from $1.01 to $1.25 per 100 lbs.

If the average price per 100 lbs. is from: $1.26 to $1.50....

1.75...

1.51 to

1.76 to

2.00.

2.01 to

2.50

2.51 to

3.00...

3.01 to

3.50.

Percent

2. Within the last 15 days of July 1937, shall be paid the amount resulting from applying the scale above to production and average price for the 1937 crop, plus an increase of 10 percent.

3. Within the last 15 days of July 1938, the same scale, plus

20 percent.

4. Within the last 15 days of July 1939, the same scale, plus 30 percent.

5.

On June 30, 1940, the debtor shall pay 20 percent of the principal and interest accumulated up to June 30, 1939; after deducting payments already made in accordance with the schedule given above. 6. On June 30, 1941, 35 percent of accumulated principal and interest.

7. On June 30, 1942, 45 percent of principal and interest, thus liquidating all payments due up to Jure 30, 1939.

8. Interest due after June 30, 1939, will be paid as specified in the corresponding contract. Amortizations of principal due after that date will be paid in the following manner:

1941,

When due before July 1, 1940, amounts shall be paid in installments of 20 percent on June 30, 1940; 35 percent on June 30, and 45 percent on June 30, 1942; when due between June 30, July 1, 1941, in the proportion of 55 percent on June 30, 45 percent on June 30, 1942. Payments due between June 30, July 1, 1942, shall be paid in full on June 30, 1942.

1940, and 1941, and 1941, and

If a mill does not grind in any one of the years 1936, 1937, 1938 or 1939, payments as specified in the schedule will be required taking as a basis the quota assigned to the mill by the Sugar Export Corporation. If without assigned quota, the mill will be considered to have produced sugar equal to the production of the last crop that it ground. (Article II.)

Payments made by the debtor in accordance with the schedule given will be applied, first, to interest due on mortgages, next to interest on loans guaranteed by securities; after that to amortizations of principal after interest has been paid. (Article VII.)

A moratorium is established, also, upon obligations guaranteed by crop lien, to end on June 30, 1942:

1. If a debt guaranteed by mortgage or securities is secured by crop lien, the rights of the creditor, after the moratorium is applied, will only be those guaranteed by the mortgage or securities.

2. When the obligation is guaranteed only by the crop lien, the rights of the creditor will be limited each year to the proceeds from products after paying cost of production, including cost of cane, salaries, wages, materials, transportation, rents, taxes and amounts corresponding to mortgages or loans.

3. If the crop lien which secures the obligation does not encumber the industrial products of the mill, but only agricultural products from the plantations comprised in the contract, the rights of the creditor will be limited to the proceeds from said products after deducting cost of rents, cultivation, cutting, loading, hauling and storing; administrative expenses, provided they do not exceed 10 percent of the value of the products, and payments for taxes.

4. When an obligation secured by crop lien affects both the industrial products of the mill and the agricultural products of the estates, both preceding regulations will be applied; wherefore the creditor will receive the net amount which, if the crop lien did

not exist, would remain in the hands of the debtor after paying the costs which may be deducted in accordance with the cited regulations. (Article VIII.)

A moratorium is established, to end on June 30, 1942, upon obligations of owners or lessees of sugar mills contracted as a result of transfer of their rights as crop lien creditors in contracts with third parties. While the moratorium is in force, the cessionary (in whose favor the transfer is made) will receive only amounts collected through the transferred crop liens. (Article IX.)

Obligations Guaranteed by Sugar or Molasses. A moratorium is established, to end on June 30, 1942, upon obligations secured by sugar or molasses.

When the contract covering a loan secured by sugar or molasses stipulates that the excess in price of the product, after paying the loan, shall be applied to other obligations previously contracted by the debtor, the proceeds from such sugar or molasses shall pay the loan secured by the products and a moratorium is granted until June 30, 1942, for payment of cited previous obligations, if these are not included in any other moratorium established by this law. Wherefore, the guarantee may not be sold unless it is for collection of the loan secured by it or for collection of obligations contracted after said loan, also guaranteed by the products. The debtor will receive the remainder of the price of the product. This rule will apply also when sugar or molasses given as guarantee secure obligations previously contracted.

When the sugar or molasses guarantee only the loan which originated the contract or obligations contracted afterwards, the contract will be considered as excluded from the moratorium. (Article X.)

Obligations Secured by Stock of Companies Owning or Operating Sugar Mills. A moratorium is established, to end on June 30, 1942, upon obligations secured by stock of companies owning or operating sugar mills.

When a creditor of the owner or lessee of a sugar mill is at the same time creditor of a third person who has given, as security for his debt, stock of the company owning or operating the sugar mill, the creditor shall not exact payment from the third person while this moratorium is in effect, if he is to receive from the owner or lessee of the mill payments as regulated in this law.

When his case is not included in the above, the creditor may exact payments from the debtor within the last 15 days of August of 1936, 1937, 1938, and 1939, but only in the proportion existing between the shares of stock given as guarantee and the total number of shares in circulation.

Principal and interest accumulated will be paid as specified. The portion of the profits obtained by the sugar company during each crop which may correspond to the encumbered shares shall be applied to the payments mentioned, and the remainder given to the debtor.

Stockholders of companies owning or operating sugar mills may demand that profits obtained in each crop be distributed in the month of July, at least sufficiently to comply with the provisions stated. If the company fails in this, the creditor may exercise the rights of the stockholder to compel the company to pay the dividend, but may not sell the securities.