JEAIL > Volume 8(2); 2015 > Articles
Research Paper
Published online: November 30, 2015
DOI: http://dx.doi.org/10.14330/jeail.2015.8.2.05

International Agreement or Private Agreement? Uplift Policy in Oil and Gas Taxation in Production Sharing Contracts between Foreign Contractors and the Indonesian Government

Arina N. Shebubakar
University of Indonesia
Jl.Mampang Prapatan XV, Komp.Mampang Asri Kav.2, South Jakarta, Indonesia
Corresponding Author: arina@indobagus-investama.com

ⓒ Copyright YIJUN Institute of International Law
This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/3.0/) which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This article examines two questions: (1) whether the Production Sharing Contract in oil and gas sectors between different countries should be considered as an international agreement or a private agreement;and (2)how to formulate uplift in the PSC which contains the value of equity for investors and the State. In the Production Sharing Contract, there is problem of setting the tax on oil and gas sector particularly uplift policy relating to the taxation of income in the state revenue sources.This issue is related to the return of controversy of operational costs recognized by the contractor (cost recovery claim).This tax controversy gave rise to uplift that is only levied on oil and gas State owned Enterprises contracting partners in the scheme of the Joint Operating Body, especially in the old fields with advanced technology (Enhanced Oil Recovery).The controversy is related to the declining production and increased production costs that are recognized by the contractor.

Keywords : Production Sharing Contract, International Agreement, Uplift, Pertamina, Taxes.

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