India Company was losing £400,000 per year to smugglers in Great Britain, but Dutch tea was also smuggled into British America in significant quantities.

To help the East India Company compete with smuggled Dutch tea, Parliament passed the Indemnity Act in 1767, which lowered the tax on tea consumed in Great Britain and gave the East India Company a refund of the 25% duty on tea that was re-exported to the colonies. To help offset this loss of government revenue, Parliament also passed the