PBB Deduction for Geothermal Activity

The Ministry of Finance (“Ministry”) has issued Regulation No. 172/PMK.010/2016 on Land-and-Building-Tax Deductions for Geothermal Businesses/Mining Exploration Stages (“Regulation 172/2016”).
 
Regulation 172/2016 sets out the basis upon which the Ministry can reduce the Land-and-Building Tax (Pajak Bumi dan Bangunan-“PBB”) for any taxpayers which are engaged in geothermal businesses/mining activities which are still in the exploration stage in a bid to increase renewable-energy production and to expedite the development of 35,000 MW power plants which will utilize renewable resources.[1]
 
Geothermal PBB Deductions
 
Taxpayers who are subject to PBB for the carrying out of geothermal business/ exploration-stage mining activities are entitled to enjoy a tax deduction facility for areas of land which are located below the earth's surface (“Geothermal PBB”).[2]
 
Tax deductions of 100% of payable taxpayer geothermal PBB will be granted by the Ministry. These taxes are set out in the notification of payable tax for taxpayers (surat pemberitahuan pajak terutang- “SPPT”) for the utilization of any land which lies below the earth’s surface.[3]
 
In order to secure such a tax deduction, taxpayers are required to satisfy the following requirements:[4]