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1983 MCA Amendments
In 1976, respondent issued Rev. Rul. 76-215, 1976-1 C.B.
194, holding that taxes paid under an Indonesian production
sharing agreement were not creditable. On June 12, 1978,
respondent issued Rev. Rul. 78-222, 1978-1 C.B. 232, holding that
taxes paid under a revised Indonesian production sharing
agreement were creditable.
In August 1978, in response to the Indonesian rulings, Amoco
decided that the MCA needed to be restructured in certain
respects in order to ensure U.S. tax creditability, including
requiring Amoco Egypt: (1) To pay its Egyptian income taxes
directly, and (2) to compute such taxes on a consolidated basis
rather than separately in respect of each concession.
Amoco developed proposed MCA amendments to submit to the
U.S. Internal Revenue Service (IRS) for a favorable ruling. The
provision in the MCA providing for EGPC's payment of Amoco
Egypt's taxes represented a change from the generally applicable
Egyptian tax law pursuant to which Amoco Egypt had previously
paid its taxes directly and, because of the Indonesian rulings,
raised questions as to creditability under U.S. law. The basic
approach of the proposed amendments was to provide that Amoco
Egypt would be subject to and pay its own taxes under the general
tax laws rather than have them paid by EGPC as provided in the
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