This short presentation describes general feature of PSC (conventional cost recovery and gross split), pretax split and post tax split, tax treaty in general, specific issues on PPh ps 26(4) in PSC

1. Tax Treaty Application on
PSC Contract
Sampe L. Purba
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2. General Features Scheme of PSC Contract
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Conventional PSC Cost Recovery Gross Split PSC Cost Recovery

3. HOW to determine Split in PSC Contract
1. Governments to determine AFTER TAX split, e.g 90 : 10, 85 : 15, 80 : 20, 70 : 30, 55 : 45,
[ depending on Fiscal terms policy, economics assumption of block etc]
2. From AFTER TAX SPLIT, then calculated PRE TAX SPLIT (gross split before tax) according to
tarif tax when PSC contract is signed. [Check whether the Contract is based on Prevailing
rate or nail down rate], e.g
Tax Ordonan
Pps
1925
UU No 7
th 1983
UU No
7 th
1991
UU No
10 th
1994
UU No
17 th
2000
UU No
36 th
2008
UU No
36 th
2008*
Corporate Tax 45% 35% 35% 30% 30% 28% 25%
Dividend tax 20% 20% 20% 20% 20% 20% 20%
Total tax 56% 48% 48% 44% 44% 42,4% 40%
*) since 2010
PRE TAX Split
in Contract
Gov split 65,91% 71,15% 71,15% 73,22% 73,22% 64.2857 46.42
Cont split 34,09% 28,85% 28,85% 26,78% 26,78% 35.7143 53,58
E.g. UU 7/83  35% +65%[1-20%] = 48%
After tax Split 85/15  Contr : 15%/[1-48%] = 28.85%, Govt. 1 – 28.85% = 71.15%
Quiz : how much the After tax Split on UU 36 thn 2008

4. Basic Percentage [Split before tax] agreed
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5. Basic Foundation
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6. Tax Treaty
Bilateral International Agreement by the Government to resolve issues
related to avoidance of double taxation and to prevent tax evasion
with respect to taxes of income  art. 32A UU PPh
To rules right to tax on income received by the residents of one or both
countries on active and passive income
Normally it applies of Permanent Establishment – a fixed place of
business through which the business of an enterprise is wholly or partly
carried on  Ps 26(4) Income Tax
Structures, models and scopes varies (i.e OECD model, UN Models etc
Content of typical tax treaty provisions : Personal connecting factors
(residence concept), Objectives (source), Administration procedures,
Rules to govern the entry in to force and termination
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7. Implication of TAX TREATY  Contractor % adjusted
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8. Depending on the Contract  in some cases, Parties
entitle to tax treaty shall refunds to BPMIGAS
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9. IN case Percentage based on Prevailing Income tax
[not nail down], Percentage adjusted
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10. ISSUES – Specific to PSC Contracts
1. Apakah Persyaratan Subjektif dan Objektif yang harus
dipenuhi oleh Interest holder (s) agar dapat
menerapkan ketentuan Tax Treaty
2. Dalam hal ketentuan 15.4.2 apply (Interest holders
entitle utk menerapkan tax treaty] namun harus
menyetor Kembali kekurangannya ke BPMIGAS/
SKKMigas, bagaimana Pengaturan dan Prosedurnya
3. Dalam hal ada dispute mengenai pemahaman dan
penerapan Tax treaty tersebut, bagaimana mekanisme
penyelesaiannya
4. Cases
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11. 11
CONCESSION
CONTRACT
OF WORK
PSC
UU No. 8/1971
COOPERATION
CONTRACT
UU No. 22/2001
PERKEMBANGAN SISTEM KONTRAK INDONESIA
1960 1966 2001 Now
UU - Indische Mijnwet, Staatsblad th.1899 No.214
UU No.44 Prp/1960
UU No.8/1971
Permen No. 22 / 2008
PP No. 35 / 2004*
UU No. 22 / 2001
<
1960
1960
-
1966
1966
-
2001
2001
-
now
PP No. 42 / 2002
PP No. 35 / 1994
PP No. 79 / 2010
*)Telah beberapa kali diubah dengan PP 34/2005 dan PP 55/2009
PP No. 27 / 2017
PP No. 53 / 2018

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PRODUCTION SHARING CONTRACTS
1964 1978 1988 1988 1989 1992 1994
PSC Gen. 1
• CR < 40%
• Tax paid by NOC
• DMO = max 25% & US$ 0,2
• Commercial  Interest offered
to NOC
PSC Gen. 2
• CR = 100%
• Tax by Contractor = 56%
• DMO Holiday = 5 yr
• IC = 20%
PSC Gen. 3
• Tax = 48%
• Oil Split 85:15
• Gas Split 70:30
Paket Insetif 1
• IC tanpa syarat
• Commercial, min 25%
• DMO = 10% x Price
• FTP = 20%
• Frontier Split:
<50 MBOPD =80:20
50 -150 MBOPD =85:15
>150 MBOPD =90:10
Paket Insentif 2
• EOR & Marginal
80:20 (konv.)
75:25 (Frontier)
• IC Deep Sea
10% (oil)
55% (gas)
Paket Insetif 3
• IC Pra-tersier= 110%
• IC Deep Sea =125%
• DMO = 15% x Price
• Gas Split
Konv.65:35 & Frontier 60:40
DeepSea 60:40 (old) & DeepSea 55:45 (new)
• Oil Split
Frontier 80:20 & Deep Sea 80:20
Paket Insentif 4
• Frontier
Oil Split 55:45
Gas Split 60:40
• DMO = 25% x Price
• FTP = 15%
• Kewajiban ASR

13. Terima kasih
sampepurba123@gmail.com
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