SKK Encourages Improvements to Migas Tax Incentive Regulations

The Special Task Force for Upstream Oil and Gas Business Activities (“ SKK Migas ”) considers that regulatory improvements are necessary, particularly with respect to the tax climate in the Oil and Gas (“ Migas ”) sector. The Head of SKK Migas, Djoko Siswanto, stated that one of the primary focuses of such improvements is the simplification of the incentive application process, which currently requires inter-ministerial coordination.

“We are required to submit an application from the Minister of Energy and Mineral Resources (“ ESDM ”) to the Minister of Finance. That process could potentially be expedited,” Djoko stated.

He explained that, substantively, the tax regulations governing the upstream Migas sector are, in fact, sufficiently supportive of the granting of incentives. However, challenges persist in the administrative aspects, particularly the slow processing of incentive applications due to mechanisms that involve both the Ministry of ESDM and the Ministry of Finance.

In addition to advocating for the acceleration of tax incentive approvals, SKK Migas is also pursuing the completion of the revision to Regulation of the Government No. 53 of 2017 on Tax Treatment for Upstream Oil and Gas Business Activities Through Gross-Split Production Sharing Contracts (“ PP 53/2017 ”).

The revision of the said regulation is currently undergoing the harmonization process at the Ministry of Law.