Page 242 - Records of Bahrain (7) (ii)_Neat

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632 Records of Bahrain

Minister of Stale
Bahru in Tnx Decree
The Bahrain Petroleum Company has, by on exchange of Icttorq
completed on 10th July, rcuchod agreement with the Ruler of Bahrain
for the payment to the Ruler of $0% of the net profits fx'oin tho

production and oalc of crude oil produced in Bahrain. Tho formal
documents which are required to give effect to this agreement are
now being prepared for signature.
2. In oscentials the agreement lo similar to those concluded ip
195° and 1951 in Suudi Arabia, Kuwait and Iraq. Under it the Hqlor
will rocclve 50# of the profits after deduction of costs of production
;
and boforo payment of foreign incoinq tax. Tho Ruler*s share of
the profits will be paid partly in royalties (and any other fixed
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payments under tho concession) and partly by a local income taifji.y
For this purpose it io nocessary for the Ruler to issue'an
income tax law which, since the Company is under the jurisdiction of

tho British Courts in Bahrain, has then to be applied by Queen1 o
Regulation to persons subject to the jurisdiction of those Courtq.
Since the Queen's Regulation will have to be submitted to the
Secretary of State for allowance before it takes effect, it is
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desirable to know that he will be prepared to allow it before tho
Ruler io advised to issue the law.
3. The draft law (of which the text is attached) provides, in
Article 1, that the Ruler shall receive 501/ of the Company's income
for the year, reduced by a sum equal to royalties and any

other exuctions puid to the Ruler. Article 3 describes the costs
which muy be deducted from the Company's gross receipts in order to
arrive ut the net income to be tuxed. Article 4 defines the value of
property for the purpooe of calculating depreciation. Articles 5 to

10 set out detuilo of the procedure for computing the income and coll-
'L thG t0X' Arti°l00 11 und la provide for offoncoo and for
disputes between the tax-payer (i.c. the Company) and the taxing
authorities. It io Intended that the latter will normally be
nettled by arbitration, in accordance with a separate arrangement
/wlth •