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While using data pump import over network link in Oracle:

    impdp test/test@db10g tables=SCOTT.EMP network_link=REMOTE_SCOTT 
    directory=TEST_DIR remap_schema=SCOTT:TEST

Where are we creating directory object (TEST_DIR, for the above example)? On source or target database? Or both?

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impdp with network_link, TEST_DIR directory needs to be created at local. In your example where @db10g database is running.

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