Indonesian gov’t revises taxation rules for gross split contract scheme, increase ease of oil and gas investment

The revision of taxation rules for gross split contract aims to increase investment enthusiasm in the upstream oil and gas sector in Indonesia.

 

Tangerang, Banten (Indonesia Window) – The government has again promised to improve Indonesia’s oil and gas investment climate by revising taxation rules for the gross split profit sharing contract system, and discussion of the revision has entered the final stage and is targeted to be published in the near future.

“We are currently revising the gross split rules for taxation. Specifically, what is being revised is for example, indirect tax, DMO Fuel Price. Monitoring and evaluation are based on only one parameter, and are carried out by the Ministry of Energy and Mineral Resources together with SKK Migas without involving the Ministry of Finance,” the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Djoko Siswanto, said on the sidelines of the Indonesian Petroleum Association (IPA) Convention & Exhibition (IPA Convex) 2025 at ICE BSD City, Tangerang, Banten province, themed ‘Energy Resilience Strategy and The Role of Oil and Gas’, on Tuesday (May 20).

The revision of the taxation rules for gross split contract, according to him, is a signal that the Indonesian government continues to improve in order to increase investment enthusiasm in the upstream oil and gas sector.

Furthermore, Djoko emphasized that the government would not close itself off from various inputs from different parties. For this reason, the regulation would continue to be updated following inputs from stakeholders.

Since 2019, there have been 46 oil and gas contracts that use the gross split scheme.

“Initially, gross split had too many variables to get incentives. Why not make it simple? We realized that. Until now, there has been no further feedback. This means they are happy with the new regime,” Djoko said.

Meanwhile, acting director general of oil and gas at the Indonesian Ministry of Energy and Mineral Resources, Tri Winarno, explained that the ease of doing business in Indonesia could 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. The IRR (Internal Rate of Return) is more than 15-17 percent. Licensing is accelerated, we try to be more attractive, and reduce bureaucracy,” Tri pointed out.

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

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

“Seventy percent of the capital expenditure for the next five years is for energy security. This is in line with the government’s vision for energy security. This is aligned with Pertamina, increasing production, but at the same time we are trying new businesses expanding geothermal, then Carbon Capture Storage and others,” Oki noted.

Reporting by Indonesia Window