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purposes of section 901. See also Texasgulf, Inc. v. United
States, ___ Fed. Cl. ___ (Oct. 15, 1999).
Credible expert witness testimony, industry data, and other
evidence in these cases establish that allowances available under
PRT effectively and adequately compensate Exxon for expenses
disallowed under PRT and that PRT, in its predominant character,
constitutes a tax in the nature of an excess profits tax (i.e.,
an income tax) in the U.S. sense.
Respondent contends that Exxon’s industry data is biased in
favor of large oil and gas companies like Exxon and that a
company-by-company analysis indicates that a majority of the
companies operating in the North Sea for a majority of years did
not have uplift allowance greater than or equal to nonrecoverable
interest expense. As Exxon points out, however, respondent’s
approach ignores the fact that PRT was designed to tax excess
profits from North Sea oil and gas production which generally
were earned by major oil and gas companies which owned the
largest and most profitable fields in the North Sea. Through
1988, approximately 75 percent of PRT was paid by only five major
companies. Small companies with licenses for marginal fields,
because of the special allowances, typically owe no PRT, and for
companies which owe no PRT it is irrelevant whether uplift is
adequate to offset nonallowed interest expense. Through 1988, 34
of the 79 oil companies included in the studies paid no PRT.
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