Oil, gas firms seek for speedy resolution of PBB tax dispute

By Febry Silaban

Oil and gas companies in the country are seeking to be able to quickly settle the current dispute over so-called land and building tax (or PBB) applied on exploration activities.

Director of Upstream at the Directorate General of Oil and Gas Djoko Siswanto said recently that the tax court has yet to decide on the tax dispute.

He said that if the court rules against the oil and gas companies, they will have to pay the PBB tax. For example, BP Indonesia has an obligation to pay about US$40 million of PBB tax.

Oil and gas contractors had for years protested the PBB tax, the amount of which is also considered as quite huge, applied on exploration activities at a time when they?re still uncertain whether to be able to find commercial reserves.

The Ministry of Finance finally issued a ruling late in 2014, exempting oil and gas companies carrying out exploration activities from paying the PBB tax. But the companies are required to pay the tax prior to the issuance of the new ruling, a decision challenged by the companies.

Elsewhere, Djoko said that the government will try to speed up the deliberation of the proposed revision of the oil and gas law, which among others aims to free the oil and gas contractors from the PBB tax obligation, with the House of Representatives.

Editing by Reiner Simanjuntak