Page:United States Statutes at Large Volume 49 Part 1.djvu/1746

 74TIr C ONGRESS. SESS. II. CH. 690. JU NE 22, 1936 . 170 1 as m ay be provided b y treaty with suc h country), or of any p art- nership not engaged in trade or business within the United States and not having any office or place of business therein and composed in whole or in part of nonresident aliens, (B) in the case of such Fore ign corpo rations . a foreign corporation, 15 per centum, and (C) 2 per centum in the et O ther individuals, case of other individuals and partnerships
 * Provided further, That

Un known owne rs. if the owners of such obligations are not known to the withholding agent the Commissioner may authorize su ch deduction and with- holding to be at the rate of 2 per centum, or, if the liability assumed by the obligor does not exceed 2 per centum of the interest, then at the rate of 10 per centum. (2) BENEFIT OF CREDITS AGAINST NET INCOME.-Such deduction Benefit of credits and withholding shall not be required in the case of a citizen or against net income. resident entitled to receive such interest, if he files with the with- holding agent on or befo re February 1 a s igned notice in w riting claiming the benefit of the credits provided in section 25 (b) ; nor Ante,p.1653. in the case of a nonresident alien individual if so provided for in Non resid ent a lien. regulations prescribed by the Commissioner under section 215. Post, p.ms. (3) INCOME OF OBLIGOR AND OBLIGEE .-The obligor shall not be Restriction on obligor allowed a deduction for the payment of the tax imposed by this and ob lig ee. title, or any other tax paid pursuant to the tax-free covenant clause, nor shall such tax be included in the gross income of the obligee. (b) NONRESIDENT ALIENS .-All persons, in whatever capacity act- Nonresident aliens. Normal i ng, including les sees or mortgagor s of real or pers onal property, at source. tax payable fiduciaries, employers, and all officers and employees of the United p States, having the control, receipt, custody, disposal, or payment of i nterest (except i nterest on deposi ts with persons c arrying on the banking business paid to persons not engaged in business in the United States and not having an office or place of business therein), dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or perio dical gains, prof its, and income ( but only to the e xtent that any of the above items constitutes gross income from sources within the U nited States), of any nonresident alien individual, or of any artnership not engaged in trade or business within the United States and not having any office or place of business therein and composed in whole or in part of nonresident aliens 7 shall (except in Exception . the cases provided for in subsection (a) of this section and except as otherwise provided in regulations prescribed by the Commissioner under section 215) deduct and withhold from such annual or periodi- cal gains, profits, and income a tax equal to 10 per centum thereof, except that such rate shall be reduced, in the case of a nonresident alien individual a resident of a contiguous country, to such rate (not less than 5 per centum) as may be provided b y treaty with suc h country : Provided, That no such deduction or withholding shall be required Provisos . corporation in the case of dividends paid by a foreign corporation unless (1) dividends. such corporation is en gaged in trade or business within the United States or has an office or place of business therein, and (2) more than 85 per centum of the gross income of such corporation for the three- year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the corporati on has been in ex istence) was deri ved from sources within the United States as determined under the provisions of section 119 ague, p. 1893 . Interest of unknown Provided further, Tha t the Comm issioner m ay author ize such t ax owne rs, to be deducted and withheld from the interest u p on any securities the owners of which are not known to the withholding agent. Un der regulations prescribed by the Commissioner, with the approval of the Secretary, there may be exempted from such de duct ion and wit hhol ding the comp ensa tion for pers onal serv ices of nonr eside nt