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Summary
The Finance Ministry (Kemenkeu) is eager to provide fiscal incentives to boost oil and gas investment and production amid rising commodity prices. It is finalizing non-tax state revenue (PNBP) adjustments for several plans of development (POD) considered uneconomical. The ministry will also grant value-added tax (PPN) and land and building tax (PBB) exemptions as long as the project is not yet profitable. “There is also an amendment to the PSC [production sharing contract] with no end date and a DMO [domestic market obligation] reward of up to 100 percent,” Fiscal Policy Agency (BKF) head Febrio Nathan Kacaribu in a working meeting with DPR’s Budget Committee on Tuesday.
The government hopes that the finalization of incentives through the revision of Government Regulation (PP) No. 53/2017 on tax treatment for gross-split contractors can be completed soon. As a result, upstream oil and gas sector business players can benefit from the surge in crude oil prices. “We are currently finalizing it to increase investments in the upstream oil and gas sector which will eventually boost oil and gas production and lifting,” he said.
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