New oil and gas contractors are free from VAT

The government will exempt oil and gas contractors from value added taxes (VAT) for the procurement of goods and services during exploration phase, the Bisnis Indonesia newspaper reported in its Tuesday edition.

Director general of oil and gas Iin Arifin Takhyan said the new policy would be applied to all the new contracts offered by the government this and next year.

?The tax exemption will be mentioned in the contracts. Therefore, there will not be any VAT on the goods and services bought by contractors," Iin said on Monday on the sidelines of the House of Representatives? joint commission meeting in Jakarta.

He said the exemption from the VAT would be another incentive after the abolishment of customs duty on the imported goods to be used in upstream operations.(*)