- 19 - purposes. Amoco Egypt initially proposed that it pay its own Egyptian income taxes out of its share of the oil. EGPC rejected this proposal, primarily because, among other things, the arrangements under the prior agreements offered EGPC the opportunity to obtain the foreign exchange benefit of obtaining dollars for oil and paying Amoco Egypt's taxes in local Egyptian currency. At EGPC's insistence, the tax provisions of the 1973 Esso agreement were used as the model for the tax provisions of the MCA. In a letter dated April 22, 1975, Amoco Egypt responded to EGPC's March 3, 1975, request for negotiations and outlined the essential terms of an agreement, one of which was that "AMOCO's income-tax liability, grossed up, would be paid out of EGPC's 80 per cent share of profit oil." Leithy reviewed the April 22, 1975, letter and initialed the English text concerning Amoco Egypt's proposal regarding its taxes. In an August 4, 1975, letter from Craig to Leithy, Craig summarized Amoco Egypt's understanding of EGPC's position with respect to certain matters, including that Amoco Egypt's income would be computed on a gross-up basis. Craig stated such gross- up would not adversely affect EGPC's interest "since EGPC is entitled to deduct from EGPC's gross income the A.R.E. income taxes of AMOCO paid by EGPC." Leithy placed his initials next to the English version of the above declaration.Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
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