Oil Refinery Tax Compliance

Certain subsidized fuels such as Premium (RON 88) and subsidized diesel receive VAT facilities — either fully exempt or with the VAT borne by the government through the state budget (APBN). Non-subsidized fuels such as Pertamax, Pertamina Dex, and aviation fuel (avtur) are subject to standard 11% VAT. Refinery companies must maintain separate tax invoice administration for subsidized and non-subsidized fuel products.

Crude oil imports by importers with API are subject to Article 22 income tax at 0.5% of the import value (CIF + import duty). This tax is non-final and can be claimed as a tax credit in the annual corporate income tax return. Importers may apply for a SKB (exemption letter) for Article 22 if they meet specific criteria under applicable regulations. Given the large volumes involved, this tax has significant working capital implications.

Yes, fuel products are classified as excisable goods under the Excise Law. However, most fuel products receive excise exemption, particularly those used for public transportation and subsidized categories. Non-subsidized fuel products are subject to excise at rates determined by PMK. Excise administration requires CK-1 documentation and periodic reporting to DJBC (Customs). Refineries must maintain separate production and distribution records for excise purposes.

New refinery construction investments may qualify for: (1) Tax holiday for pioneer sector investments under PMK-130/2020 (5-20 year income tax reduction), (2) Tax allowance providing 30% net income reduction over 6 years, (3) Import duty exemption on refinery equipment through Masterlist facility, (4) VAT not collected on imported machinery. Applications are coordinated through BKPM with detailed investment documentation requirements.

Refinery land and buildings are subject to PBB (land and building tax) based on NJOP determined by the regional tax office. The NJOP should reflect the land value as industrial property rather than speculative commercial values. Processing units, storage tanks, and pipelines are included in the building assessment. Refineries should conduct periodic independent valuations and file PBB objections if the assessed NJOP exceeds market value, as overvaluation can result in significant excess tax payments.

Yes. We are registered tax consultants and support clients with compliant, professional tax advisory and representation.

Contact us early. We help analyze the risk, prepare supporting documents, draft the response, and assist discussions with the tax office.

It depends on your structure and transactions. We identify legal efficiencies, incentives, and reporting improvements without crossing into tax evasion.