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the Egyptian Government, as compensation for no longer taking tax
credits for Amoco Egypt's taxes.
In January 1981, Amoco submitted another ruling request to
the IRS seeking a determination that taxes paid by EGPC on Amoco
Egypt's behalf under the existing agreements were creditable.
Amoco believed that the basic provision whereby Amoco Egypt's
taxes were paid by EGPC would pass muster under the temporary
regulations and, if so, that it would not be necessary to
continue the difficult negotiations on the PPIA approach. In
stating the reasons why the Egyptian tax system met the
requirements for a creditable tax under section 903, Amoco
stated: "No portion of Amoco's tax is refunded to it, nor is any
portion of such tax used directly or indirectly to provide a
subsidy to Amoco." The computation of EGPC's taxes was not
addressed, and Amoco did not indicate that EGPC had claimed a tax
credit for taxes paid on behalf of Amoco Egypt.
In February 1981, EGPC formed a new negotiating team that
included Mansour. Mansour was more amenable than the previous
lead negotiator, Kaptan, to handling the loss of EGPC's right to
the credit under Article IV(f)(6) through a reduction in the
royalty rate.
In March 1981, Amoco Egypt sent a letter to EGPC to resolve
an impasse over a "keep-whole" clause. The clause was requested
by EGPC as a means of recovering from Amoco Egypt the difference,
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