Tax office optimistic to win case against oil, gas contractors: UPDATE

The tax office is optimistic to win a tax dispute case against dozens of oil and gas contractors of the state-owned oil and gas firm Pertamina, the Bisnis Indonesia daily reported Tuesday.

The dispute centers in the objection filed by the oil and gas contractors at the tax dispute settlement body (BPSP) against the ruling of the tax office requiring the contractors to pay value added tax (VAT). Previously, the contractors had enjoyed a special tax treatment, allowing them to delay paying the VAT as stipulated under their contracts with Pertamina.

The paper quoted head of the Jakarta tax office Muhammad Said as saying that the oil and gas contractors could not win their cases because of two weaknesses.

First, their contracts with Pertamina was a private contract which is subordinate to the Tax Law.

Secondly, the oil and gas contract does not specifically mention about the VAT delay. But it is stipulated by a separate presidential decree.

BPSP had earlier ruled in favor of the tax office in the case against oil and gas contractor Kufpec.(*)