Coll 1/45 'Aden. Changes in civil administration in the event of separation from India: income tax arrangements; question of collection of income tax elsewhere than at Aden, from firms doing business in Aden' [‎7v] (14/30)

Political Secretary :
I think that v/e must he careful not to generalise
too much from a difficult definition in the Income-tax
Act which in any case can only he interpreted according
to facts of which v/e have the scantiest knov/ledge.
I have no douht that if something like the existing
Indian law continues to he the basis of Aden income-tax,
Aden can tap everybody who does business there. In any case
obviously Aden can have any lav/ it likes and can tax
anybody who comes within its jurisdiction as much as it
likes - subject to the usual limitations of expediency.
It is, however, by no means necessarily the case that
income tax in Aden will not be liable to Indian tax in
addition if that income accrues ultimately to somebody
within the ambit of the Indian law. How far double
taxation is likely to arise and whether special
arrangements should be made for relief therefrom I cannot
say on the facts before me. But the possibility had
better not be ignored.
The above considerations are incidentally relevant
to any estimate of the tax likely to accrue to Aden. In
that connection I may also observe that it is impossible
for us to supply or check any estimate of the probable
yield of Aden income-tax.
I do not understand why the Resident thinks that
Aden tax rates must necessarily be the same as the
Indian rates. This seems to be a question for
decision on its own merits when the Budget is nearer
finality.
V