Taxation · KBLI 06100

Gas & LNG Tax Compliance

LNG contract tax planning, upstream gas VAT, gas fiscal incentive optimization

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What usually goes wrong

  • LNG Take-or-Pay Contract Taxation

    Take-or-pay payments received by gas producers without physical lifting have different PPh and VAT implications than standard commodity sales — correct classification is critical for audit defense.

  • Oil and Gas PBB Calculation

    Land and building tax for oil and gas work areas uses a specialized calculation: land area × NJOP per m² plus building area × NJOP per m², with different rates for onshore and offshore areas.

  • Differentiated Gas VAT Treatment

    Domestic pipeline gas to households receives government-borne VAT, industrial/commercial gas uses 11% VAT, and LNG exports use 0% VAT — each requiring separate administration.

  • PSC Fiscal Term Application

    Gross split and cost recovery PSC structures create different tax profiles in terms of cost deductibility, government tax share calculation, and periodic compliance reporting.

  • Marginal Field Development Incentives

    Marginal gas field development qualifies for enhanced fiscal incentives under gross split PSCs, including investment credits, DMO holidays, and additional splits — but requires detailed documentation and SKK Migas approval.

What we do

  1. 01

    Gas PSC Tax Management

    Management of gas contractor tax obligations including government tax share calculation, cost recovery monitoring, and periodic compliance reporting to DGT and SKK Migas.

    • Timely tax reporting
    • Ready for DGT audits
    • Minimal tax disputes
  2. 02

    LNG Contract Tax Advisory

    Tax structuring for LNG contracts including take-or-pay, make-up gas, and price review provisions from PPh, VAT, and withholding tax perspectives.

    • Controlled tax exposure
    • Optimal WHT treatment
    • Comprehensive contract review
  3. 03

    Infrastructure Tax Planning

    Optimization of tax treatment for LNG facility, pipeline, and processing plant investments including depreciation strategy, input VAT recovery, and PBB management.

    • Maximum tax deductions
    • VAT recoverable
    • Measured PBB
  4. 04

    Marginal Field Incentive Advisory

    Strategic advisory for marginal gas field development incentives including gross split enhancements, investment credits, and DMO holiday applications through SKK Migas.

    • Enhanced incentives
    • Improved project economics
    • Regulatory compliance

Related regulations

  • UU 22/2001

    Oil and Gas Law

    Legal basis for upstream natural gas including LNG and pipeline

  • PP 79/2010 jo. PP 27/2017

    Fiscal Regime

    Cost recovery, gross split, gas project incentives

  • PMK-252/2008

    Upstream VAT

    VAT facilities for upstream gas imports

If the tax office starts asking questions

The team that keeps your books and files your taxes also stays with you through an SP2DK, an audit, an objection and an appeal.

How we handle tax disputes

Frequently Asked Questions

Is domestic gas sales subject to VAT?

Domestic pipeline gas sales to households and small customers receive government-borne VAT (PPN DTP) facilities. Industrial and commercial gas customers are subject to standard 11% VAT. LNG exports are subject to 0% VAT. Input VAT related to gas production and processing remains creditable even for supplies benefiting from VAT facilities, subject to applicable regulations.

How is oil and gas PBB calculated?

PBB for oil and gas work areas uses a specialized calculation: NJOP of land (per m²) × work area size plus NJOP of buildings (per m²) × building area × applicable rate (maximum 0.5%). NJOP for offshore work areas differs from onshore rates. Oil and gas PBB is a deductible expense for corporate income tax purposes, not a tax credit.

Are there fiscal incentives for marginal gas field development?

Yes, the government provides enhanced fiscal incentives for marginal gas field development through the gross split PSC mechanism under PP 27/2017, including: investment credits, DMO holidays (exemption from domestic market obligation), and additional contractor splits. These incentives are negotiated in the PSC contract and require approval from SKK Migas and the Ministry of Finance.

How are LNG take-or-pay payments taxed?

Take-or-pay payments received under LNG contracts (payments for contracted volumes even if not physically lifted) are generally treated as taxable income subject to standard corporate income tax. The VAT treatment depends on whether physical delivery occurs in the same period. If the payment is received without matching physical delivery, the VAT treatment should be analyzed based on the specific contract terms and applicable VAT regulations.

Who handles my tax work?

Your tax work is handled by Arunika's tax consultants. We confirm the scope, deadlines and price before work starts.

What should I do if I receive an SP2DK letter or tax audit notice?

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

What does tax planning cover?

We review your structure, transactions and available incentives so tax is calculated under the rules, without crossing into tax evasion. The outcome depends on your facts, so we do not promise a savings figure.

Related Industries

Tell us about your business

Send your line of business, rough annual turnover, and what is going wrong. We reply on WhatsApp.

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