1.
GV BUILDING
0.04

2.
CU STREET SIGN "AVENUE KLEBER"0.07
0.07

3.
GV INT..FRENCH REPRESENTATIVE M. LEDUC SPEAKS, MONACO REPRESENTATIVE M. BLANCHI ON FAR RIGHT OF SCREEN.
0.11

4.
SV DITTO.
0.16

5.
CU M.BLANCHI.
0.21

6.
CU M.LEDUC
0.25

7.
GV GROUP OF OFFICIALS.
0.27

8.
GV FRENCH AND MONACO REPRESENTATIVES PREPARE TO SIGN AGREEMENT.
0.32

9.
SV PRESSMEN.
0.35

10.
SCU PAN..FROM M.LEDUC TO M.BLANCHI SIGNING AGREEMENT.
0.46

11.
GV INT.ROOM
0.50

12.
GV M.LEDUC AND M.BLANCHI SHAKE HANDS.
0.54



Initials AA/V/MGT/PB



Script is copyright Reuters Limited. All rights reserved

Background: THE DISPUTE BETWEEN FRANCE AND THE PRINCIPALITY OF MONACO WAS FORMALLY SETTLED IN PARIS YESTERDAY (SATURDAY) WHEN THE FRANCO-MONAGASQUE FISCAL CONVENTION WAS SIGNED BY M.FRANCOIS LEDUC, FOR FRANCE, AND M.BLANCHI, ON BEHALF OF MONACO.

THE NEW COMMERCIAL ACCORD BETWEEN THE TWO COUNTRIES IS LIABLE TO ELIMINATE MUCH OF MONACO'S ATTRACTIVENESS AS A TAX HAVEN.UNDER THE AGREEMENT, TAXES ON CORPORATION HEADQUARTERS WITHIN THE PRINCIPALITY, WHICH RECEIVE MORE THAN 25 PER CENT OF THEIR PROFITS FROM OUTSIDE IT, WILL BE RAISED FROM 1 TO 25 PERCENT IMMEDIATELY.EVENTUALLY THEY WILL BE RAISED TO 40 PER CENT.MONACO CITIZENS, HOWEVER, WILL CONTINUE TO ENJOY TAX FREE STATUS, BUT FRENCH RESIDENTS OF MONACO.WHO HAVE BEEN THERE LESS THAN FIVE YEARS WILL PAY THE SAME TAX AS ORDINARY FRENCHMEN.THOSE WHO HAVE LIVED THERE SINCE BEFORE OCTOBER, 1957.WILL CONTINUE TO BE UNTAXED.

FRANCE DEMANDED, A LITTLE OVER A YEAR AGO, THAT THE TAX SYSTEM OF MONACO SHOULD BE ALIGNED WITH THAT OF FRANCE.MONACO'S REFUSAL PROVOKED A NUMBER OF FRENCH ECONOMIC REPRISALS, INCLUDING THE ESTABLISHMENT OF CUSTOMS POSTS ALONG THE BORDER BETWEEN MONACO AND FRANCE.THE FRENCH CUSTOMS POSTS WERE WITHDRAWN, WHEN AGREEMENT WAS FINALLY REACHED, LAST WEDNESDAY.

MONACO HAS SOME 23,000 INHABITANT MOST OF THEM OF FRENCH ORIGIN.