Oil, gas exploration exempted from PBB tax

In a bid to help lure badly needed fresh investment in the country?s oil and gas sector and to help increase production, the Minister of Finance has finally issued a new regulation exempting oil and gas exploration activities from the so-called land and building tax, or better known here as PBB.

The new ruling is contained in the Minister of Finance Regulation No 267/PMK.011/2014, which was signed at the end of last year. Minister of Finance Bambang Brodjonegoro said Wednesday that this was a form of incentive to help push investment in the oil and gas sector.

Oil and gas industry players have strongly protested the PBB tax applied during exploration stage as it was quite financially burdensome at a time when they have yet to make production.

The upstream oil and gas authority SKK Migas warned last year that oil and exploration activities in the country may eventually stop due to the PBB tax. Indonesia?s oil and gas production has been on a declining trend since the past few years due to a combination of factors including lack of new investment in exploration projects.

Editing by Reiner Simanjuntak