Gov?t mulls non-fiscal incentives in oil, gas exploration: Report

Government is contemplating whether to provide non-fiscal incentives to companies exploring for oil and gas in the country after a 10 percent value-added tax was imposed two years ago, Dow Jones Newswires quoted a government official as saying on Tuesday.

Oil and Gas Director General of the Mines and Energy Ministry Rachmat Sudibyo said the ministry is looking for alternative incentives after the Finance Ministry refused to exempt oil companies from paying VAT before they start commercial production.

Rachmat was speaking to reporters on the sidelines of an oil and gas conference in Jakarta, but was unable to provide further details of what incentives the government may offer.

The Finance Ministry lifted the VAT exemption two years ago in order to raise more tax revenues to finance the cash-strapped state budget.

Foreign and local oil companies have asked the Mine and Energy Ministry to persuade the Finance Ministry to revoke the tax.

Rachmat said the government needs to provide incentives to local and foreign companies to make the country attractive for oil and gas investors. (*)