Deputy Minister of Energy and Mineral Resources Arcandra Tahar said here, Friday, the regulation that would be issued later this month would set up a tax system similar to the Government Regulation No. 79/2010, through the Government Regulation No. 27/2017 on cost recovery schemes.
"We are preparing a new regulation on taxation related to gross split with a treatment like the one contained in Regulation No. 79. I hope we can issue the regulation by the end of this month," Arcandra said.
He explained that the regulation was being eagerly awaited by the Cooperation Contract Contractors who were interested in 15 oil and gas blocks offered by the government.
Under the regulation, the contractors would be granted tax incentives that would exempt them from various taxes during the exploration period. Meanwhile, in the exploitation period, the contractor would get tax exemption.
The tax exemptions are in the form of import duties on goods imports that are used in petroleum operations, value added tax, luxury goods tax, income tax and land and building tax deduction of 100 percent.
He added that the tax regulation was one of the factors responsible for investors reluctance to work on oil and gas blocks offered by the government. In fact, oil and gas blocks have been offered since a year ago.
(KR-LWA/INE/B003)
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