Tax office reverses decision on drilling tax

Directorate General of Tax finally decides to reverse its earlier decision to impose US$20 million of withholding tax on a rig used by US super major Exxon Mobil Corp. to drill a deepwater exploration well in Makassar Strait, a senior official with upstream oil, gas authority BPMIGAS said on Tuesday.

Vice Chairman Hardiono told Petromindo.Com that tax office will reimburse the funds already paid by ExxonMobil Oil Indonesia (EMOI) to get West Aquarius drillship-owned by Seadrill-to sail to the Philippines.

The drillship has completed drilling of Kris-1 well in Mandar block, Makassar Strait and should immediately leave for the Phillipines. Tax office, however, refused to release the rig, insisting that $20 million tax must be paid before the rig could be released.

Tax office in the past never imposed such tax to drilling contractor as according to PSC contract, taxes during exploration period would be borne by the government. (bernard)