Word: aramco
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...consider imposing a tariff on oil imports, to offset "the threat to our national security" resulting from the loss of tax revenues from overseas oil operations. What Senator O'Mahoney meant in particular was the Arabian American Oil Co.'s tax arrangement with Saudi Arabia, through which Aramco last year avoided paying a penny of corporate income tax to the U.S. Treasury...
...firms are permitted to deduct foreign taxes from their U.S. tax load, but in Aramco's case, the argument is whether the money Aramco pays Saudi Arabia is a tax or a disguised royalty. The difference is important. Royalties paid abroad can be deducted as business expenses before a company figures the net on which it pays U.S. taxes; direct foreign taxes, on the other hand, can be deducted from the tax bill itself, thus greatly reducing-or wiping out-the company's U.S. tax liability...
...Split. Until 1950, Aramco paid Saudi Arabia about 20% royalty on all oil profits. Then, vexed that the U.S. was getting more in income taxes on Aramco profits than Saudi Arabia got in royalties, and spurred by a 50-50 oil-profit split in Venezuela, King Saud decided that Saudi Arabia should get 50% of the oil profits. But instead of increasing royalties, Saudi Arabia passed an income tax which, together with royalties, would take half of Aramco's profits...
...Aramco could have fought the tax, since a 1933 agreement with the Saudi Arabian government barred income taxes. But it decided to pay anyway, because the tax did not actually cost Aramco any additional money. It simply shifted the company's tax payments from the U.S. to Saudi Arabia. Last year, by deducting its payments to Saudi Arabia ($280 million) and taking advantage of the 27½% depletion allowance given to all U.S.-owned oil companies, Aramco wiped out its U.S. corporate tax liabilities. Senator O'Mahoney and others contend that Aramco and Saudi Arabia settled...
...greater demand than Geneva's. "There are such a multitude of conferences," says Dean Stelling-Michaud, "that every day we witness a new international organization of some kind." When UNESCO decided to set up its Russian-language section, it asked the school to do the job. When Aramco and Saudi Arabian officials got bogged down in a Geneva conference last year, they called on the school for English-Arabic translators to help the negotiators out. In a sense, says Stelling-Michaud, the Geneva alumnus is rapidly becoming the indispensable international man. "In European organizations like the Coal and Steel...