Oil and Gas: VAT and Luxurious Goods Tax Exemptions

Minister of Finance Regulation No. 27/PMK.011/2012 on the Second Amendment to Minister of Finance Regulation No. 231/KMK.03/2001 (“2001 Regulation”) on Implementing a Value Added Tax (“VAT”) and Luxurious Goods Tax on Imported Goods that are Exempt from Import Duties (“Regulation”) was issued to address tax and customs issues in the upstream oil and gas field including geothermal energy.

The Regulation facilitates tax and duty exemptions for goods used for upstream exploration of oil and gas. These tax and duty exemptions are regulated in Article 2 (1) of Minister of Finance Regulation No. 177/PMK.011/2007 on the Exemption of Import Duties for Imported Goods for Upstream Oil and Gas Business. Article 2 (1) exempts imported goods intended for upstream oil and gas business purposes from import duties.