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changes that needed to be made to the concession agreements to
ensure U.S. tax creditability. Nordberg specializes in
international tax matters and assisted in the restructuring of
the Indonesian production sharing agreement so that it resulted
in a creditable tax.
Amoco developed a proposal whereby the agreements would be
amended to provide that Amoco Egypt would pay its Egyptian income
taxes directly and by deleting all of the provisions relating to
EGPC's payment of Amoco's Egyptian taxes on Amoco's behalf,
including Article IV(f)(6) of the MCA. Amoco also proposed the
use of a Petroleum Production Incentive Allowance (PPIA), which
was a formula under which additional oil would be allocated to
Amoco Egypt in order to allow it to pay its Egyptian taxes
directly while keeping the net economic interests of Amoco Egypt
and the ARE substantially unchanged. Amoco developed the PPIA
because EGPC was not willing to alter the existing production
split, see supra p. 20, to reflect a gross-up for the taxes to be
paid directly by Amoco Egypt. EGPC found an increase in Amoco
Egypt's production allowance more appealing for political
purposes. Since under the PPIA approach, Article IV(f)(6) would
be deleted, its meaning was unimportant to Amoco at this time in
connection with the ruling request.
In the course of developing the proposed changes in the MCA,
it was understood by Amoco and its advisers that Article IV(f)(6)
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