Page 248 - Records of Bahrain (7) (ii)_Neat

638 Records of Bahrain

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all crude is sold out of the tank where it is gauged to an
associated Company.
With these factors in mind it was proposed that provisions
along the lines of section 469 of the English Income Tax Act,
1952, dealing with sales botween associated persons, should
be inserted in the Decree. To this the Company replied that a
Tax Law containing such px'ovisions would not be regarded as
a proper Tax law for U.S. Tax credit purposes, The precise
reasons for this have been asked for.
The Company has stated that its object in the present
price formula is to guarantee a minimum price to His Highness.
While this is appreciated, His Highness has stated that the
Company must always sell at a fair reasonable price and that
although the present formula be retained as a guaranteed
minimum, a provision should be added to that effect, It has
been suggested that the agreement with the Company should provide
for a fair price not less than the weighted average of the
prices of imported crude.
During discussions on this subject the Company has replied
to requests by His Highness for "average world prices", or
"average Persian Gulf prices", that such averages are not poss­
ible to calculate.
U.S.Government Cartel Investigations.
Ilis Highness lias asked for and the Company has agreed to
write a letter to the effect that no losses or expenses arising
out of this investigation shall be deductable in arriving at in­
come for tax purposes, A proposed Draft of such letter is
enclosed.
Foreign Taxation.
Since it does not appear clear from the Decree whether
this is deductable or not , it is proposed that a clause be
added to assure that it is not .
I have the honour to be Sir,
Your obedient Servant
( Adviser to the Government )

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