Pertamina asks government to write off tax payment

Pertamina has asked the government to write valued added tax (VAT) payment worth Rp 2 trillion imposed against the state owned oil and gas company?s production sharing contractors.

Abubakar Sidik Nitikusumah, the senior manager of Pertamina?s production sharing contractors? management, said the state owned oil company had formally sent a letter requesting the government to write off the tax payment.

?The investment in the oil and gas sector will be affected if the government continues to require oil and gas companies to pay VAT,? he said, adding that more than 70 percent of 50 oil and gas companies had been asked to pay their VAT. Most of them have yet to started production.

In 1988, Pertamina?s production sharing contractors were exempted from value added tax payment. But according the tax office, the incentive is no longer valid with the amendment of the value added tax law in 1994. According to the revised law, the incentive given to Pertamina?s production sharing partners ended in 1999. (*)