- 13 - royalties on behalf of Esso. The proposed model provided that Esso "shall be exempted from the Income tax in the A.R.E." In March 1973, Esso submitted proposed modifications to the agreement, including modifications to the tax provisions to make clear that Esso was liable for Egyptian income taxes. Esso also proposed language describing the calculation of Esso's taxable income for Egyptian income tax purposes and stated that EGPC would pay Esso's taxes out of EGPC's share of crude oil and provide Esso with official receipts evidencing payment of Esso's taxes. Neither the EGPC model agreement given to Esso nor the revised draft agreement Esso presented to EGPC contained any reference as to how EGPC's taxes would be computed. In late March, a revised proposal was submitted by Esso, including both English and Arabic versions. Neither version had a provision pertaining to the computation of EGPC's taxes. On April 3, 1973, EGPC responded to the revised proposal by complaining that it would have nothing left after paying royalties, Esso's taxes, and its own tax liability, and asked Esso to accept a smaller share of production. Esso determined that EGPC had not deducted taxes paid on behalf of Esso in its sample calculations and on April 6, 1973, informed EGPC that "this tax amount would be deductible in calculating EGPC's taxable income." Further, "Thus with royalty expensed, EGPC would have a net income * * * after payingPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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