TAXATION OF OKINAWA BUREAU TCN'S
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP07-00469R000101220009-3
Release Decision:
RIPPUB
Original Classification:
K
Document Page Count:
6
Document Creation Date:
December 27, 2016
Document Release Date:
October 31, 2012
Sequence Number:
9
Case Number:
Publication Date:
September 27, 1973
Content Type:
MEMO
File:
Attachment | Size |
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Body:
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
V a
27 September 1973
MEMORANDUM FOR, Acting Director, FBIS
THROUGH : Acting Chief, Operations croup
SUBJECT . Taxation of Okinawa Bureau TCN's
REFERENCE . My lognote of 11 Sept 73; Okinawa Bureau
Cable to HHdgs., 25 Sept 73.
1. Forwarded herewith is a draft copy of a memoran-
dum to USFJ, J-5, concerning the request of the Mayor of
Yomitan for payment by our TCN's of local municipal and
prefectural residence taxes. These taxes are based on in-
come and, like national income taxes, are withheld. Thus
we can assume that if we begin withholding taxes for the
Okinawa local governments the national government will re-
quire the same. Either they are taxable or they are not.
2. Taking one of our single local employees as an ex-
ample, this person pays 2.4% in local taxes and S.4a in na-
tional taxes, for a total of 7.8%. This scales down some-
what with dependents (one employee with two dependents pays
only 1.6% in local taxes), but of course also increases with
greater income, as the taxes are graduated. Not big as U.S.
taxes go, but a significant amount nevertheless.
3. When I first wrote my 11 September lognote, and
mentioned the possibility that we might want to pay the lo-
cal tax in the same manner as the Karavas tax, I was not
aware that this tax in Okinawa is in reality an "income tax,"
not a license to work, as it is in Karavas. And, of course,
in Cyprus our TCN's are not subject tothe Karavas tax because
of their overall tax exemption, although we pay it for the
locals. In any case, my recommendation is that if it is de-
termined that our TCN's must pay here, they should pay it
from their own wages. The tax, incidentally, would be retro-
active to 1972 for those on duty 1 January 1973.
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
4. As i in4icate in the draft, I see some contradic?.
Lion between the- SOFA agreement of 1954 and Japanese tax
law as indicated` in the -other attachments. But I am not
optimistic that we"can got the military to change its mind
from the view that our people should pay. Third State Na-
tionals employed by., the military have been paying these
taxes. The J-S will no doubt, because of past practice if
for no other reason, insist that our third nationals pay.
They are not sympathetic to our position. I had originally
planned to address the memo to Schmitz, as political-'Military
Counse or, but both John Sylvester, Consul-General, and
feel we should go through channels in view of our
USTJ affiliation, and I now agree.
S. I request that Aleadquarters expedite considera-
tion of this draft and if-possible make corrections to us
by wire. I would like to get this underway before the pre-
fectural government makes an issue. of it.
C e. , xa.nawa ureau
Attachment
Draft Memorandum to J-5 w/atts
STAT
STAT
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
DRAF11
MEMORANDUM FOR : Commander, U.S. Forces Japan
ATTENTION : J-5, -Mr. C. A. Feissner
SUBJECT : Request from Mayor of Yomitan for
Payment of Municipal and Prefectural In-
habitants Tax
REFERENCE : My telephone conversation with Mr. C. A.
Feissner of 11 Sept 73
1. As you know, this office is in receipt of a letter
from Mayor Soko Furugen of Yomitan-son (attached as Annex A)
requesting payment by FBIS employees of the Municipal and Pre-
fectural Inhabitants Tax "under the category of Art. 294, Para.
1, Sect. 1," in accordance with "Art. 317, Para. 2" of the Law
(copies of which are not available to this office). A verbal
conversation with the Mayor's office on 11 September clarified
that the employees in question are Third State Nationals who
are registered under Special Immigration Status 4-1-16-3.
HIS Japanese employees already pay the taxes; the Mayor's
office is not concerned with U.S. employees.
2. Your office has forwarded to this office a copy of
a memorandum to the Joint Committee (SOFA), dated 4 October
1954, subject: "Status of Third State Nationals," in which
the U.S. side (Para. 6) concurs with the view of the Japanese
STAT
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
Government that Third State employees "be registered with'
the immigration authorities thus establishing their legal
status in Japan." Para. 8 of the..same memorandum specifies:
"The U.S. likewise has no desire to interfere with the normal
functioning of the Japanese Government in its process of tax-
ing Third State Aliens residing in Japan." This memorandum
is attached as Annex B.
S. On the other hand, this office has in its files a
copy of "Individual Income Taxation in Japan - 1971," issued
by Price Waterhouse & Co., Tokyo, dated 28 July 1971, which
describes Japanese Income Tax laws, and which, on p. 10,
specifies among "types of.income that are exempt from taxa-
tion" the "salaries, wages, etc. of employees of foreign
governments or local public bodies, thereof, on a reciprocal
basis." (Attached as Annex C.)
4. If another item in our files is correct, a cabinet
order issued under Art. 9, Para. 1, Item (8) 1967 Income Tax
Law of Japan, states that personnel on duty with a foreign
government will not be taxed when the foreign country does
not impose the tax correspondingly on earnings of public
service personnel of Japan on. duty in said country. (Attached
as Annex D.) It is our understanding that the U.S. Internal
Revenue Code of 1954 (Sect. 893) (attached as Annex E) pro-
vides for such reciprocity. Our files have also indicated
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
that in November 1968 the U.S. Internal Pevenue Service
representative in Tokyo expressed the view that under Japa-
nese Law "non-Japanese employees" serving with the U.S. GeV-
ernment are immune from Japanese taxation.
5. This office obviously wants to conform with U.
Japanese agreements, to avoid any kind of confrontation with
Japanese authorities, and to maintain a "low profile" both
in our local relations and with the central government.
Nevertheless, we should probably consider the following points:
a. The 4 October 1954 memorandum specifies that
-I not interfere with the ttnormal functioning" of
the Japanese Government.in taxing 'Third State Nationals.
But .J'epanese Tax Law would seem to indicate that at the
present time i SN's are not taxable.
h. Although Japanese authorities have never made a
request for PSIS Third State Nationals to pay income tax,
it would follow that if they pay Municipal and Prefectural
taxes they would also be subject to the National Income
Tax and this should also be withheld.
STAT
_3_
Declassified in Part -Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3
for this as taxation is applied to individuals filing
a return.
6. It is requested that the above be clarified and
resolved before this office initiates withholding and directs
its employees to file returns. If, in light of the points
mentioned. above, it is determined that our TSN's are in fact
taxable under Japanese 'law, we will of course conform and
initiate the withholding of tax.
STAT
Chief, Okinawa Bureau, FBIS
Copies (w/atts) to:
Director, Foreign Broadcast Information Service.
t.USARBCO,.Directorate for Personnel ?, Administration,
Sukiran Area Civilian Personnel Office, Attn. Mir. Sukos ry
Mr. Charles Schi itz Counselor for Politico-Military Affairs,
U.S. Embassy Tokyo.
Chief, Tokyo Bureau, FBIS
U.S. Consul-General, Naha.
Declassified in Part - Sanitized Copy Approved for Release 2012/11/01: CIA-RDP07-00469R000101220009-3