Encourage Upstream Oil And Gas Industry, Government Revises Tax Regulations For Gross Split Contract Scheme

TANGERANG - The government has again promised to improve Indonesia's oil and gas investment climate by revising tax regulations for the gross split sharing contract system. The revision discussion has entered the final stage and is targeted to be published in the near future.

Head of the Special Task Force for the Implementation of Upstream Oil and Gas Business Activities (SKK Migas) Djoko Siswanto revealed that the revision of the tax regulations for the gross split contract is a signal that the government continues to improve in order to increase investment passion in the upstream oil and gas sector.

"Currently we are revising the gross split rules for taxation. Specifically, it is revised, for example, indirect tax, DMO Fuel Price. Monitoring and evaluation are based on only one paramatter, and carried out by the Ministry of Energy and Mineral Resources together with SKK Migas does not involve the Ministry of Finance," explained Djoko in the Plenary Session IPA Convex 2025 quoted Wednesday, May 21.

Furthermore, Djoko emphasized that the government would not close itself to various inputs from various parties. For this reason, the rules will continue to be updated following the input of stakeholders. Since 2019 there have been 46 oil and gas contracts using a gross split scheme.

According to him, there have been several changes to the contract scheme, all of which are the result of discussions with contractors.

"Initially gross split too many variables to get incentives. Why not make it simple. We realized it. Until now there is no follow-up feedback. This means that they are happy with the new regime," said Djoko.

Meanwhile, Acting Director General of Oil and Gas of the Ministry of Energy and Mineral Resources Tri Winarno explained that the ease of doing business in Indonesia can be seen from the government's initiative to provide more profit sharing to contractors, especially for the management of oil and gas blocks in frontier areas.

"Indonesia is trying to be more attractive, especially for gas. For example, contractors can receive a profit sharing of 50 percent or more. IRR is more than 15-17 percent. Licensing is accelerated, we try to be more attractive, and reduce bureaucracy," said Tri.

Pertamina, as one of the oil and gas industry players who also needs various supports, including mainly from the government through the implementation of regulations that support investment.

Oki Muraza, Senior Vice President Technology Innovation of PT Pertamina (Persero), said Pertamina's business strategy is in line with the government's road map to achieve energy security.

"70 percent capital Expenditure in the next 5 years for energy security. This is in line with the government's vision for energy security. This is already alligned with Pertamina, increase production, but at the same time we are trying a new business to expand geothermal, then Carbon Capture Storage and others," explained Oki.