Minister of Finance Regulation No. 22/PMK.011/2011 (‘Regulation’) has been issued to provide fiscal incentives for 2011, in the form of the state bearing any VAT on the import of equipment necessary for the purposes of upstream oil and gas and geothermal exploration activities. The Regulation is intended to increase the national production of oil, gas, and geothermal energy.
Pursuant to Article 2 (1), the fiscal incentives can be claimed on equipment specifically required for exploration activities, which is not available in Indonesia in terms of production, certain specifications, or availability. The businesses that can benefit are those that:
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(i)
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have a binding joint operation contract with the government that was entered into following the enactment of Law No. 22 of 2001 on Oil and Gas; and
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(ii)
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have a binding contract with the government or have obtained a Geothermal Mining Business License as of 31 December 1994 or have otherwise been appointed by the government to conduct a general survey.
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To obtain the fiscal incentives, it is necessary to submit an application to the Director General of Customs and Excise along with a Goods Import Plan (Rencana Impor Barang) that has been approved and validated by the Director General of Oil and Gas or the Director General of Renewable Energy and Energy Conservation (as applicable). The Goods Import Plan has to include, among others, the name of the contractors, the taxpayer registration number (NPWP), the basic contract, the tariff code, a description of the goods, the country of origin, and the estimated cost of the goods to be imported.
Furthermore, Director General of Customs and Excise Regulation No. PER-6/BC/2011 has been issued to provide more detailed guidelines for the implementation of the Regulation.
The Regulation has been in force since 7 February 2011 and will remain valid until 31 December 2011.
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