Regulation on VAT exemption for oil, gas exploration to be issued this year

The government regulation on the exemption of value added tax (VAT) on import made by oil and gas contractors for their exploration activities will be issued this year.

The new regulation will be applied retroactively for all activities carried out since January 2011.

?It?s still being drafted at the Directorate General of Taxation. It will probably be disseminated together with the Ministry of Energy and Mineral Resources and upstream oil and gas regulator BPMigas,? said Askolani, Director of Non-Tax State Revenue at the Ministry of Finance.

Askolani said that the new regulation must be issued this year to clean up tax claims filed by production sharing contractors (PSCs).

Vice President of the Indonesian Petroleum Association (IPA) Sammy Hamzah welcome the planed new regulation. ?As long as it would not become a burden to contractors, we support it,? he said.

He said that if the new regulation is intended to exempt tax, such regulation has long been awaited by contractors. (*)