Ann: Onshore Indonesian Oil Operations Update - February 2019, page-26

It looks like the Indonesian Tax system is simple to understand although the regulation on companies are similar, each interest holder, including the operator of the work area, has to register with the Indonesian tax office from the moment it obtains an interest in the work area.

The income tax rates, consisting of corporate income tax (CIT) and dividend tax or branch profits tax (BPT) for branch operations, vary depending on the year
the contract was entered into.

The contractor’s taxable income is broadly calculated as gross income less tax
deductions.

The calculation embraces the “uniformity concept” as the basis for determining which costs are recoverable and which are tax deductible. Under this concept, very broadly, costs that are recoverable are tax deductible.

But I find it hard to grasp the fact that
The Government applies the tax ring-fencing rule, meaning that costs incurred
by the contractor in one working interest are not allowed to be offset by income
of another working area. As a result, an entity is likely to hold working interest
in only one contract area.

Is BAS working on getting more in the same area and will they be considered a one contract area is something to consider.