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Regs., and Amoco Egypt is entitled to the benefit of Example (3)
of section 1.901-2(f)(2)(ii), Income Tax Regs. Petitioner
further argues that EGPC derived no benefit from the credits
because it was required annually to remit its surplus to the
Egyptian Finance Ministry. Respondent argues that EGPC is a
separate legal entity which should not be equated to the Egyptian
Government and that Example (3) therefore has no bearing on the
issue before us and that, as a result, EGPC is "another person"
within the meaning of section 1.901-2(e)(3)(ii), Income Tax Regs.
Respondent further argues that the benefit EGPC derived from the
credits for Amoco Egypt's income taxes is not negated by the
requirement that EGPC transfer its surplus annually to the
Egyptian Government. Consequently, respondent concludes that
Amoco Egypt received an indirect subsidy with the result that the
foreign tax credits claimed by petitioner for the Egyptian income
taxes of Amoco Egypt should not be allowed.
We first discuss EGPC's status.
Pursuant to Egyptian Law No. 20 of 1976, EGPC "is a Public
Authority endowed with an independent juristic personality,
engaged in developing and properly utilizing the petroleum wealth
and in supplying the country's requirements of the various
petroleum products." It is wholly owned and controlled by the
Egyptian Government. Upon EGPC's dissolution, all of its assets
revert to the Egyptian Government.
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