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Egyptian income tax." By this, Esso meant that EGPC should
deduct from EGPC's taxable income taxes paid on Esso's behalf and
royalties paid. It was also suggested to EGPC, although not
pursued, that its profits would increase if royalty expenses were
credited against tax.
In subsequent meetings with Esso negotiators, EGPC indicated
uncertainty about whether the ETD would permit EGPC, in computing
its taxable income, to deduct royalties and the taxes paid on
behalf of Esso pursuant to the proposed production sharing
agreement. The tax provisions were important to reaching a final
Esso agreement. Following a meeting among Mefferd, Kruger, and
Agnew for Esso, and I. Radwan, Mansour, and Eshmawi for EGPC, the
following Article III(f)(6) was added, at EGPC's request, to the
production sharing agreement:
In calculating its A.R.E. Income Taxes, EGPC shall be
entitled to deduct all royalties paid by EGPC to the
A.R.E. Government and the A.R.E. Taxes of ESSO paid by
EGPC on ESSO's behalf.
Esso and EGPC initialed an agreement in English on May 19,
1973. The agreement was not binding on either party until a law
authorizing the Minister of Petroleum to enter into the agreement
was issued and published in the Egyptian Official Gazette.
Between May and early August 1973, Esso's Mefferd and Nabih Doss,
a lawyer for an Esso marketing affiliate in Egypt, worked with
EGPC's Mansour and Mongui El Rakshy, general counsel of General
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