Tax office to take over all tax audit in oil and gas companies

The Tax Directorate General will take over beginning this year the audit of income taxes paid by production sharing contractors (PSCs) from the government?s audit agency BPKP as part of its aggressive moves to increase the government?s tax income, Bisnis Indonesia reported on Monday.

At present BPKP handles the inspection or audit on the income tax paid by PSCs or companies which carry out exploration and production activities in gas and oil sector under a production sharing contract with Pertamina or government. The tax office?s audit works are limited only on value added tax and sales taxes.

Tax Director General Hadi Poernomo said that the takeover of the audit on the income tax would made to ensure that the oil and gas sector would give a significant contribution to the government?s tax revenues. "At present, the contribution of the oil and gas sector in tax revenues is still insignificant," he said.

According to him, his office has carried out intensive training for the tax employees to do the audit jobs on the income tax of the PSCs which often raised controversy. The tax income of PSCs is paid after the deduction of cost recovery ? all costs related to exploration and production activities. The different perception of the costs which should be included or excluded from the cost recovery often causes controversy. (*)