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In calculating its A.R.E. income taxes, EGPC shall be
entitled to deduct all royalties paid by EGPC to the
GOVERNMENT and Amoco's Egyptian Income Taxes paid by
EGPC on Amoco [Egypt]'s behalf.
The Arabic version of Article IV(f)(6) is the same except for the
addition of the Arabic equivalent of "therefrom" after the phrase
"to deduct".
During the years at issue, EGPC interpreted Article IV(f)(6)
as authorizing it to credit the Egyptian income taxes of Amoco
Egypt against its Egyptian income taxes rather than to deduct
such taxes in calculating its income.
The determination of petitioner's entitlement to a foreign
tax credit under section 901 depends upon the resolution of the
following issues:
(1) Whether Article IV(f)(6) authorizes EGPC to take a
credit for Amoco Egypt's Egyptian income taxes paid by EGPC.
Analysis of this issue involves consideration of whether the MCA
is a contract or a law of the ARE, including consideration of the
impact of the variation between the English and Arabic versions
of Article IV(f)(6), and, in either case, consideration of the
intent of the parties and the extent to which such intent should
be taken into account.
(2) The impact of the position of the Egyptian Tax
Department over the years in respect of the taking of the credit
by EGPC, and particularly its action in 1992, disapproving such
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