MEMR proposes tax exemption in purchase of oil, gas from traders

The Ministry of Energy and Mineral Resources (MEMR) has proposed to the Ministry of Finance for tax exemption in the purchase of oil and gas products from traders, Kontan reported on Tuesday.

The paper quoted Director for Oil and Gas Upstream Management at the ministry, Djoko Siswanto as saying that under the current regulation, the tax exemption is only given in the purchase of oil and gas directly from contractors.

He said that imposing income tax on the traders will increase the cost of oil and gas purchase, which does not bode well to the government?s plan to increase the domestic utilization of the output share of oil and gas contractors operating in the country.

Under the plan, part of the contractors? oil and gas output will be allocated for domestic refineries. Only those which do not meet the specifications required by domestic refineries can be exported, based on recommendation to be made by the integrated supply chain unit of state-owned oil and gas firm PT Pertamina. The plan is accommodated in the current revision of the oil and gas law.

According to the MEMR data, export of oil and gas output belonging to the contractors currently stands at about 400,000 bpd including condensate, of which about 200,000 bpd can potentially be process at domestic refineries. (*)