50-50 Agreement Between Saudi Arabia And Aramco- April 07, 2021
Oil, God and gold bear the subtitle The Story of Aramco and the Saudi Kings and claim to be an Aramco story from start to finish. It is therefore surprising that the author omitted any mention of the so-called 50-50 agreement of December 1950. The signing of this agreement was probably the most important event between the granting of the initial concession in 1933 and the final transfer of ownership to the Saudi government in 1980. Not only did the agreement increase the revenues of the Saudis of Aramco, but for the first time, it gave them an interest in the price at which the company was selling its oil. These agreements, along with other similar oil companies, led to the creation of OPEC ten years later. Interestingly, the Saudis have noticed a clause in U.S. tax law called a “foreign tax credit.” Under this law, U.S. corporations that paid taxes to a foreign country could deduct them from their U.S. taxes. The Saudis understood that they could raise their taxes on Aramco without harming their competitiveness. On 30 December 1950, Aramco and Saudi Arabia signed a new agreement based on the 50-50 principle. As an example of its effect, the U.S.
Treasury received $43 million in taxes in 1949, and the Saudis had $39 million in royalties. With the new agreement, the Saudis received $110 million in 1951 and the U.S. Treasury $6 million (after the tax credit). Thus, while the tax on Aramco remained the same, the payment of the U.S. Treasury moved to the Saudi government. A new foundation has been created for the relationship between David Ricardo`s owner and the tenant. And the tenant oil companies have had to deal with their importance. Inside Jersey, several departments worked on a working paper on the fifty fifty agreements to provide internal advice to the company. The newspaper found that since the expropriation of Mexico, Jersey has undergone a considerable educational process. “We now know that the security of our position in each country depends not only on compliance with laws and treaties, or on the level or level of our payments to the government, but on whether our entire relationship is accepted at any time by the government and public opinion of the country – and by our own government and public opinion – as “just.” If it is not accepted in this way, it will be modified. Unfortunately, equity and injustice are essentially concepts of emotion and unseeded and measurable norms. As troubling and unsuitable as it may be for the engineers, businessmen and buccaneers who operated international oil companies, it was a fact of life.
“Experience already shows that the “50/50″ concept is by nature satisfying.” The two governments, SO of NJ, and Shell finally agreed on the “fifty-fifty” principle. Under this policy, the taxes and royalties due in Venezuela would correspond to the net profit of the oil companies, which, in theory, distributes the rent equally between the parties. In exchange for the agreement, questions about the validity of the concessions were neglected. In March 1943, Venezuela transformed the “fifty-fifty” principle into an oil law. It should be noted that, unlike the majors, some of the smaller companies, such as The Pantepec Oil Company, managed by William F. Buckley, were outraged. Ricardo developed the concept that was to form the framework for the struggle between nation states and oil companies.