Association Pushes for Comprehensive Revision of Upstream Oil-and-Gas Tax Regulations

Chairman of the Investment Committee of the National Oil-and-Gas Companies Association (Asosiasi Perusahaan Migas Nasional – “ASPERMIGAS”), Moshe Rizal hopes that the government will immediately complete improvements to the regulatory climate in the upstream oil and gas (“Oil-and-Gas”) sector.  According to Moshe, the government needs to change the basic tax provisions stipulated in Law No. 22 of 2001 on Oil-and-Gas, as amended by Regulation of the Government in Lieu of Law No. 2 of 2022 on Job Creation (collectively referred to as “UU 22/2001”).

According to Moshe, the revision of UU 22/2001 needs to restore the assume and discharge mechanism, especially for oil-and-gas exploration activities. The return of this mechanism is considered to attract potential investors because they are not burdened with a lot during the exploration period which has a high risk. Input has been submitted to the Government and the House of Representatives of the Republic of Indonesia (Dewan Perwakilan Rakyat Republik Indonesia/DPR RI).

“That is actually very good because from the start investors can calculate their income. That will reduce the risk. If it is indeed returned to its original state,” said Moshe.

Moshe assessed the planned amendment to  Regulation of the Government No. 79 of 2010 on Refundable Operating Costs and Income Tax Treatment in the Upstream  Oil-and-Gas Business Sector, as amended by Regulation of the Government No. 27 of 2017 (collectively referred to as “PP 79/2010”) and Regulation of the Government No. 53 of 2017 on Tax Treatment in Upstream Oil and Gas Business Activities with Gross Split Production Sharing Contracts (“PP 53/2017”), needs to be carried out simultaneously with the amendment to UU 22/2001 According to him, this is able to provide regulatory certainty and attract investment in the upstream oil-and-gas sector.