Govt expected to decide on oil, gas exploration tax mid December
Friday, November 22 2013 - 01:07 AM WIB
The Indonesian Petroleum Association (IPA) expected the government to make a favorable decision in the middle of next month regarding its complaint over the burdensome land and building tax (or PBB) imposed on oil and gas exploration activities.
IPA Chairman Lukman Mahfoedz said that the association has filed the complaint with the government in June of this year.
"We have talked with the Director General of Taxation Fuad Rachmany and the government about our complaints that we submitted in June 2013. They gave positive response,? Lukman said on the sidelines of a seminar on taxation Thursday. ?The revision (of the particular tax ruling) is currently being processed. Hopefully, it can be completed on December 15.?
Oil and gas production sharing contractors operating in the country who are still in exploration stage have demanded for an exemption of the PBB as it?s been quite burdensome particularly as they have not entered production stage.
Lukman feared that if the government fails to ease the burden of the oil and gas contractors, it would discourage exploration activities in the country, which eventually would affect the nation?s oil and gas production.
Lukman said that between 2011 and 2012, the oil and gas contractors paid a combined PBB of US$260 million.
He said that oil and gas exploration activity does not necessarily end up with favorable outcome. He pointed out as an example that from 2009 to 2011 there were 12 production sharing contractors which failed in deepwater drilling activities after spending $1.9 billion.
Unfortunately, under the current tax ruling, they?re still burdened with the obligation to pay PBB.
Director General of Taxation Fuad Rachmany was quoted by the Kontan daily Friday as confirming that the government including the Ministry of Finance is expected to make a decision regarding the complaint over the PBB in oil and gas exploration in the middle of next month.
He said that while the PBB may remain in place, the value is expected to be adjusted so as not to be overly burdensome for the oil and gas contractors.
Editing by Reiner Simanjuntak