ExxonMobil wins an appeal in dispute with Tax Directorate General

ExxonMobil, which operates a massive gas field in North Aceh, has won an appeal in a dispute related to Value Added Tax payment with Tax Directorate General, Bisnis Indonesia reported on Monday.

In its recent decision, the Tax Dispute Settlement Agency (BPSP) ruled in favor of Exxon in the latter?s appeal to revoke a decision to pay VAT imposed on the company?s explorations service. As the consequence of the appeal decision, the Tax Director General is required to return the tax payment with additional two percent interests.

Based on the TAX Law No. 11/1994 on Value Added Tax, Exon Mobil is not required to pay Value Added Tax on its exploration activities, according to BPSP?s appeal decision.

"I accept the appeal decision. According to the existing law, the Tax Directorate General should respect all the decision made by BPSP," Tax Director General Hadi Purnomo was quoted as saying.

Although he accepted the appeal decision, he said that BPSP?s ruling was wrong. He said that the Valued Added Tax payment imposed on Exxon is in line with the Presidential Decree, which had been used as the foundation of the enforcement of the Tax Law No. 11/1994.

The BPSP?s decision could be considered a break through for Exxon. In its previous appeal, BPSP always issued a ruling in favor of Tax Directorate General. (*)