- 37 -
important concern was to make the changes to the MCA simple, and
to get them done quickly. In this light, Nordberg advised that
it was not necessary to insist that EGPC change its practice of
taking a tax credit for Amoco Egypt's taxes.
Nordberg's advice was based in part on consultations with
other lawyers at his firm, including Kevin Dolan and Daniel
Horowitz, who had been involved in foreign tax credit issues as
employees of the Treasury Department and IRS National Office,
respectively. Based on those consultations and a memorandum
prepared by Dolan,7 Nordberg concluded that, because of EGPC's
status as a public authority, the subsidy rule under the Treasury
regulations would not be implicated regardless of EGPC's
treatment of the tax it paid on behalf of Amoco Egypt.
In a letter to EGPC, dated October 14, 1981, Amoco Egypt
presented a proposed amending agreement, wherein it stated:
The substance of the changes is to provide for the
computation of Amoco Egypt's Egyptian income tax
liability on the basis of the consolidated income from
all concession agreements. EGPC shall continue to
discharge Amoco's Egyptian tax liability on its behalf
and, contrary to my earlier advice, no change need be
made in the provision relating to EGPC's right to
deduct such taxes paid on Amoco's behalf in calculation
of EGPC's Egyptian income tax liability.
6(...continued)
be left in the agreement as is. In his testimony, Chiati shows
an understanding that EGPC was entitled only to a deduction.
7 Dolan's memo concluded that the arrangement is properly
analyzed under the direct subsidy rules since EGPC is a
governmental entity.
Page: Previous 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 NextLast modified: May 25, 2011