New policy on VAT and import duties to be issued soon: Aburizal

The Coordinating Minister of the Economy Aburizal Bakrie said on Monday the government would issue a new tax policy in January next year to remove import duties on oil and gas exploration and production equipment.

The new policy, which is in the form of governmental regulation or presidential decree, will also allow oil and investors to delay the payment of value added tax (VAT) on their exploration equipment.

?The new policy will be issued by Jaunary 17,? Aburizal said during the Bimasena International Energy and Mineral Conference 2004 ? in Jakarta.

The tax policy is among the major concerns of oil and gas investors at present. In the past, oil and gas investors were allowed to pay import duties and VAT after they began commercial production. Under the existing regulations, they are required to pay the taxes in advance when they start their works. The government has to refund the import duties and VAT payment within certain period of time, but in reality, oil and gas investors say it is not easy to obtain the tax refund, while they anxiously need the money to finance their investment activities.

Aburizal said that under the planned tax policy, investors would also be able to obtain their VAT refunds in between 60 and 120 days.

Earlier, in the same forum, President Susilo Bambang Yudhoyono promised to remove all barriers hampering investment in the energy and mining sectors.

The President mentioned in his speech the unfavorable tax policy was among those that his administration would review. (Alex)