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

• Author: Arina N. Shebubakar
• Pages: 393-394

Uplift Policy 393

VIII JEAIL 2 (2015)

Arina N. Shebubakar

∗

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

International Agreement

or Private Agreement?

Uplift Policy in Oil and

Gas Taxation in Production

Sharing Contracts between

Foreign Contractors and the

Indonesian Government

∗ Senior Legal Counsellor at PT. Indobagus Investama; Ph.D. candidate at the University of Indonesia. LL.B./LL.M.

(Indonesia). ORCID: http://orcid.org/0000-0002-6635-2397. The author may be contacted at: arina@indobagus-

investama.com / Address: Jl.Mampang Prapatan XV, Komp.Mampang Asri Kav.2, South Jakarta Indonesia.

DOI: http://dx.doi.org/10.14330/jeail.2015.8.2.05