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Jakarta Post

Businesses ‘wait and see’ over gross-split

  • Viriya P. Singgih

    The Jakarta Post

Jakarta   /   Thu, January 4 2018   /  01:28 am

Business groups have called on the government to deliver on its promise to provide them with compensation over indirect taxes paid in the production stage by upstream oil and gas contractors operating under the new gross-split mechanism.

President Joko “Jokowi” Widodo’s administration issued Government Regulation (PP) No. 53/2017 on tax treatment for gross-split contractors on Dec. 28, nearly a year after the new mechanism was first introduced on Jan. 16, 2017.

Prior to the issuance of the tax regulation, Deputy Energy and Mineral Resources Minister Arcandra Tahar repeatedly said indirect taxes, including value-added tax (PPN) and luxury tax (PPnBM), paid by contractors during a production stage would be compensated with “additional split” at an equivalent value.

However, such a stipulation has yet to be outlined under the regulation. Commenting on the matt...