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sec. 1.901-2(a)(2), Income Tax Regs; see also Phillips Petroleum
Co. v. Commissioner, 104 T.C. 256, 297 (1995).
In Phillips Petroleum Co., we held that Norway’s Special Tax
on oil and gas activity in the Norwegian sector of the North Sea
constituted, for U.S. Federal income tax purposes, a creditable
tax under section 901. Norway’s Special Tax is similar in a
number of significant respects to PRT.
Under temporary Treasury regulations applicable to the years
involved in Phillips Petroleum Co., Norway’s Special Tax was to
be treated as a tax as long as “no significant part of the charge
[represents] compensation for the specific economic benefit
received”. See sec. 4.901-2(b)(2)(iii), Temporary Income Tax
Regs., 45 Fed. Reg. 75649 (Nov. 17, 1980), as applicable to 1979
to 1982. Applying that test, we held in Phillips Petroleum
Co. v. Commissioner, supra at 289-297, that Norway’s Special Tax
constituted a tax and not payment for specific economic benefits.
The Norway Special Tax was enacted in 1975 and was imposed
on oil and gas companies operating under discretionary licenses
granted by Norway requiring payment of initial fees, annual fees,
and 10-percent royalties. We concluded that by payment of the
Special Tax the oil and gas companies were not granted additional
rights under their licenses, that the fees and royalties paid
under the licenses represented substantial compensation for such
licenses, that the Special Tax constituted a tax and not an
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