Govt mulls tax exemption for locally-produced crude sold to Pertamina

The government is mulling to provide Value Added Tax (PPN) exemption for locally-produced crudes sold to local refineries.

Minister of Finance Bambang PS Brodjonegoro was quoted by Kompas as saying the chance is high that the government will provide the tax exemption as it will become a tax incentive for domestic refineries.

Bambang made the statement to comment the plan of upstream authority SKK Migas to send a proposal this month to the Directorate General of Taxation, asking for such tax exemption.

SKK Migas? Chairman Amien Sunaryadi said there are at least two big oil producers of the country, PT Chevron Pacific Indonesia and ExxonMobil Indonesia, which have been committed to selling their crude production to state owned oil and gas firm PT Pertamina (Pesero) to meet the needs of the firm?s refineries. However, since their trading agents of both firms are domiciled outside of Indonesia, the sales of the crudes are liable for a 3 percent PPN

?They are ready to ship their crudes to Pertamina. However, it has yet to be realized due to the tax rule,? Amien said.

Amien noted if both firms, which are the largest oil producers in Indonesia, send all their crude production to Pertamina, the firm may need not to import its crude needs any longer. (*)