Page 3 - Newsletter (New Fiscal Relaxation for Pharmaceutical, Upstream Oil & Gas and Tourism Sectors)

DDTC Newsletter Vol.02 | No.04 I September 2019 Page 3 of 5

NEW FISCAL RELAXATION FOR PHARMACEUTICAL, UPSTREAM OIL &
GAS AND TOURISM SECTORS

Meanwhile, equity denotes the production yields that procedure for filing and completing requests for VAT
are available to be shared between SKK Oil and Gas return for personal goods carried by individual passport
or BPMA and contractor after being deducted by FTP, holder from abroad.
investment incentive (if available) and operational cost
reimbursement. Presently, there are five locations for foreign tourists
in order to request the VAT return. Those points of
With the enactment of MoF Reg No.119/2019, the return are at Kualanamu Airport (Medan), Soekarno-
processing of reimbursement proposal is conducted by Hatta Airport (Jakarta/Tangerang), Adisucipto Airport
BPMA for cooperation agreement of which the region of (Yogyakarta), Juanda Airport (Surabaya) and Ngurah Rai
oil and gas activities is located within BPMA authority. Airport (Denpasar).
Additionally, BPMA will process the reimbursement
Upstream Oil and Gas Business
proposal for cooperation agreements signed by
Obtains Fiscal Incentives
contractor with BPMA.
Beyond this scope, the reimbursement requests proposed
by contractor of which oil and gas activities are within The government has again provided fiscal facilities for
the region the BPMA authority – with such proposal the activities of exploration and exploitation carried
has been posted to Directorate General of Budget prior out by upstream oil and gas for production sharing
the enactment of this regulation – will be processed contracts. This is regulated through MoF Regulation No.
according to MoF Reg No.119/2019. 122/PMK.03/2019 (MoF Reg No. 122/2019). There are
several fiscal reliefs in the regulation that will take effect
The Relaxation of VAT Refund 30 days after 27 August 2019.
Provision to Increase Foreign Tourist First, in the form of non-collected VAT or non-collected
Spending VAT and STLG. This facility is provided for the acquisition
of certain taxable objects and/or certain taxable services,
the utilization of certain intangible taxable objects,
The provision regarding the relaxation of VAT return for
and the utilization of certain taxable services in the
foreign tourists who have visited Indonesia has been
exploration and exploitation stages.
officially released. This is regulated in MoF Regulation
No. 120/PMK.03/2019 concerning Procedures for
Second, the tax deduction of 100% from the owed oil and
Submitting and Completing the Requests for Returning
gas land and building tax (PBB Migas) as contained in the
Value-Added Taxes of Personal Goods Owned by Foreign
Tax Due Notification Letter. This facility is provided both
Passport Holders (MoF Reg No. 120/2019)
for exploration and exploitation stages.
In the regulation that promulgated on 23 August 2019
Moreover, for the contractors at the exploitation stage
and will be implemented effectively per 1 October 2019
who cannot achieve the internal rate of return and have
the minimum value of VAT that can be refunded by foreign
working areas with certain criteria such as located in the
tourists is still IDR500,000. It means that the spending
deep sea or intended for developing the unconventional
for individual should reach at least IDR5 million.
field also have chances for similar tax facility. However,
they are only provided the 100% tax deduction of PBB
The main distinguishing factor of this new policy is that
Migas for earth’s body which is located under the earth
the value of VAT as of IDR500,000 could come from a
combination of several special VAT invoices (Faktur surface.
Pajak Khusus/FPK) with the timeframe of a month before
Third, the exemption of withholding income tax. This
the departure. Thus, the request of refund itself can be
facility is provided for the cost charging of operation in the
submitted with various FPKs from different retail stores
form of shared facilities (cost sharing) by the contractor
and on different transactional dates.
in the context of utilizing state-owned goods in the
upstream oil and gas sector. In addition, the submission
One of the government’s considerations of this tax
of taxable services from this operational activity is also
relaxation provision is to attract foreign passport holders
not subject to VAT.
(tourists) to visit Indonesia and encourage the domestic
economy through increasing the participation in the
Fourth, the expenditure of indirect cost allocation from
retail business sector.
the contractor’s headquarter would not be considered as
the object of withholding income tax and the object of
In addition, MoF Regulation No. 120/2019 is objected
VAT collection if the expenditure meets the criteria listed
to provide legal certainty and to improve the quality
in this regulation.
of services in the implementation of provision on the