Exxon Corporation - Page 13




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          PRT, not for the otherwise generally applicable U.K. corporation            
          tax.                                                                        
               In order to provide uniform administration of the Ring Fence           
          Tax and PRT, in 1975 the Oil Taxation Office of the U.K. Inland             
          Revenue was established and was delegated that responsibility.              
               The fees and royalties due under the licenses issued by the            
          United Kingdom to Exxon and other oil and gas companies regarding           
          the North Sea were not modified, supplemented, or altered by the            
          PRT that was enacted in 1975.                                               
               Gross income relating to North Sea oil and gas recovery                
          activities, with limited exceptions, constitutes the tax base for           
          PRT, and losses relating to activity outside the North Sea ring             
          fence are not allowed to offset income from activity occurring              
          within the North Sea ring fence.  PRT is imposed on income                  
          relating to extraction of oil and gas from the North Sea, income            
          earned by taxpayers providing transportation, treatment, and                
          other services relating to oil and gas resources in the North Sea           
          (tariff receipts), and income relating to sale of North Sea                 
          assets (disposal receipts).                                                 
               Interest income, income from sales of purchased and resold             
          crude oil, and income relating to sale of gas exempt from PRT               
          liability are not included in the income base for PRT purposes.             
               In computing net profits for PRT purposes and on which PRT             
          liability is calculated, all significant costs and expenses,                






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