About 300 oil and gas cooperation contracts will receive tax relief incentives. Secretary-General of the Ministry of Energy and Mineral Resources (ESDM) Teguh Pamudji said the revision of Government Regulation No. 79/2010 concerning Refundable Operating Costs and Income Tax Treatment in the Upstream Oil and Gas Business Sector will guarantee incentives for these 300 contracts.
One of the incentive requirements is that the cooperation contract is signed prior to the enactment of Government Regulation no. 79/2010. With the revision of Government Regulation no. 79, the assumption and discharge concept will be applied, which means that the calculation of the state and contractor's share includes the tax component.
Thus, the contractor is no longer subject to additional taxes. In fact, oil and gas contracts should have been signed after the issuance of Law no. 22/2001 on oil and gas, and Government Regulation no. 79/2010 is still subject to additional tax. For the cooperation contracts signed before the oil and gas law and after the oil and gas law, but before the government regulation was enacted, assume and discharge still applies, ".
He detailed that there were around 130 cooperation contracts signed before the issuance of the Oil and Gas Law, such as Blok-Rokan in Riau. In addition, 170 contracts were signed prior to Government Regulation no. 79/2010 is published like the Cepu Block in East Java.
According to him, the government also encouraged oil and gas contracts to be signed after the issuance of Government Regulation no. 79/2010 can get tax breaks. Teguh estimated that there were about four oil and gas contracts signed after 2010 or after the government regulation on cost recovery was issued. He explained that contracts signed after 2010 could not apply the assume and discharge scheme through the revision of Government Regulation No. 79/2010. This is because the provision of tax facilities for the types of local taxes and levies cannot be given because the two types of taxes are not regulated in the regulation.
Teguh said that the implementation of assuming and discharge will facilitate the calculation of the project's economy because contractors are no longer subject to additional taxes that arise for upstream oil and gas activities. However, he considered it should have a positive impact on investors. Not everything is given. There are regional taxes and levies that are not covered.
Director of Financial Control for the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Parulian Sihotang, said that until now there has not been any discussion regarding the mechanism for tax returns or refunds after the revision of Government Regulation No.79/2010.
Bisnis Indonesia, Page-30, Wednesday, Oct 19, 2016
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