Oil, gas contractors to be given tax incentives

Oil and gas contractors adopting the gross split scheme production sharing contract will be entitled to tax incentives both during exploration and exploitation stages, Bisnis Indonesia reported on Wednesday.

The paper quoted Deputy Minister of Finance Mardiasmo as saying that oil and gas contractors in the exploration stage will be exempted from tax burden as under the gross split scheme the government would no longer reimburse the expenses and investment of the contractors.

He added that expenses during exploration stage can be used as reduction in the income tax.

Mardiasmo said that fiscal incentives will also be given to contractors already in production stage, but it will be given selectively to fields with low economic value or production has yet to reach target as set out in the plan of development. Once the production level as reached the designated target, the incentives will be eliminated. (*)