Purchasing Chevron and ExxonMobil's Oil, Pertamina refuses to pay Tax

KATADATA - PT Chevron Indonesia and ExxonMobil Indonesia, two contractors of the cooperation contract (KKKS) in Indonesia, have agreed to sell their oils to PT Pertamina (Persero), a state-owned oil and gas giant. This is important because the government’s wish to fulfill the refinery needs for the domestic production of crude oil is still hard to be realized due to the shortage of oil production. However, the deal has not been inked because Pertamina disagrees to pay the tax. 

Amien Sunaryadi, the Head of the government’s Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), said that Pertamina would only purchase the oils from the two contractors if the company would not be charged with any value-added tax (VAT). Pertamina disagrees to spend more money to pay the tax, and the same principle also goes for Chevron and ExxonMobil, who do not wish their revenue to be decreased when selling their oil within the country.

In principle, VAT is to be applied because Chevron and ExxonMobil cannot sell their oils directly. They need distributor, which is more widely known as trader, and it is located in Singapore. And this means, Pertamina would need to import the oil, and in this kind of transaction, VAT would be applied. And in order to solve this problem, SKK Migas is still trying to persuade the Finance Ministry to erase the VAT for Pertamina. (Read more: Oil Purchase through Traders is suggested to be Tax-Free)

Amien admitted that the attempt has been conducted since last year, but until now, it is still hard to be realized because until the end of last year, the Finance Ministry, through the Directorate General of Tax, is trying very hard to pursue the tax absorption target. And so, at the fresh start of the year, Amien is hoping that the ministry would be able to make an exception and erase the 3 percent VAT. If this is realized, then Chevron and ExxonMobil will supply 120,000 barrels of oil per day to contribute to the domestic oil needs, which is at 800,000 barrels per day. 

(Read more: Two Oil and Gas Contractors to supply Oil for Pertamina’s Refineries & Oil Export will be limited Next Year)