Complex sentence: Expenditures can be inflated to reduce or eliminate the profit of the project thereby reducing the amount which the corporation must pay in royalties or other profit-sharing agreements based on the net profit.
Split into simpler sentences: Expenditures can be inflated to reduce or eliminate the profit of the project. The effect of this practice is to reduce the amount which the corporation must pay in royalties or other profit-sharing agreements based on the net profit.