Demands for the payment of Chinese taxation are not legally enforceable against British subjects unless the regulations imposing the tax have been made binding on British subjects by King's Regulation made under the China Order in Council, 1925. Certain taxes, as for example customs duties or land taxes, are, however, for obvious reasons, generally paid without any King's Regulation on the subject. Demands have recently been made on foreign nationals, including British subjects, owning property in the area administered by the Chinese Municipality of greater Shanghai for the payment of a land values tax. As this tax is legal under Chinese law, non-discriminatory, reasonable in amount and generally paid by Chinese, British subjects have been advised that effective support cannot be guaranteed to them in the event of their getting into difficulties with the Chinese authorities through nonpayment of the tax.

A law imposing a business tax was promulgated in 1931 and provided inter alia that the tax was to be considered as local revenue and that the rates were to be determined separately by the various provincial or municipal Governments. Since that date demands have been made at various places, including recently Canton, for the payment of the tax, but, as the regulations in question have generally been of a vexatious and unpractical character and have contemplated unfair and irregular methods of assessment and enforcement by arbitrary executive action rather than by recourse to due process of law, British merchants have resisted payment and have been afforded the fullest possible support in that attitude by His Majesty's Consular and Diplomatic representatives in China.