The government guarantees that oil and gas Cooperation Contract Contractors (KKKS) are free from levies and taxes (assume and discharge) during their business activities in Indonesia. This government plan will be included in the revision of Government Regulation Number 79 of 2010 concerning Refundable Operating Costs.
"There has been an agreement with the Deputy Minister of Finance to apply the assume and discharge principle," said Teguh Pamudji, Secretary General of the Ministry of Energy and Mineral Resources.
However, not all contractors will receive this special treatment. Only contractors who signed a cooperation contract prior to the regime of Law Number 22 Year 2001 regarding Oil and Gas will receive this privilege.
The principle of assume and discharge requires the contractor to obtain certainty for the results of oil and natural gas without deducting levies and taxes. Fiscal provisions also apply nail down or are not affected by policies issued by the government.
Teguh said that currently there are 288 oil and gas cooperation contracts. Of that total, five contracts were signed after Government Regulation No. 79/2010 was enacted. The result is that only 283 companies will get the assume and discharge principle.
Meanwhile, the five companies that signed contracts after the Government Regulation on Operating Costs did not assume and discharge. In exchange, the government will provide a number of incentives, such as tax exemptions.
The ministry also proposes more various revenue-sharing options, such as gross splits and sliding scales. The goal is to make the contract more flexible to the economy in the field.
"The language is not assume and discharge, but tax incentives. The economy is almost the same, "said Teguh.
Regarding cost recovery, Teguh said, the government must be flexible. Because, if the rules are made too rigid, the discovery of new reserves will be hampered.
"The contractor is worried that the costs will not be reimbursed".
Luhut Binsar Pandjaitan
Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said the draft revision of Government Regulation Number 79 Year 20 10 had been submitted to the Coordinating Minister for the Economy for signature. Luhut said the revision stated that the Ministry of Energy would grant the authority to provide incentives to oil and gas investors.
Previously this authority was in the hands of the Ministry of Finance. In the revision of no tax in the exploration period, fiscal incentives can be provided for the exploitation period with the project economy. According to Luhut, in addition to fiscal incentives, the Minister of Energy can provide non-fiscal incentives.
Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan said he would continue the plan of the Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan to reduce cost recovery. Director of the Indonesia Petroleum Association Marjolijn Wajong complained about the fiscal obligations that have been implemented by the government, such as taxes and levies.
Koran Tempo, Page-14, Wednesday, Oct 19, 2016
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