Indonesia, ExxonMobil disagree over tax debt

Indonesia is still in dispute with ExxonMobil and Kodeco Energy Co. over the companies' alleged tax debts totaling $63 million, while three other firms have settled their outstanding bills.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 18 -- Indonesia is still in dispute with ExxonMobil Corp. and Kodeco Energy Co. Ltd. over the companies' alleged tax debts totaling $63 million, while three other firms have settled their outstanding bills.

The two firms and Indonesian state auditors still hold different opinions about how the tax is calculated and the amount owed, according to R. Priyono, director of BPMigas, Indonesia's upstream oil and gas regulator.

Priyono told a hearing at the House of Representatives Commission VII for energy and mineral resources that ExxonMobil, based on an audit result from the State Development Finance Comptroller (BPKP), still owed the state $30.65 million in unpaid corporate taxes.

According to the BPMigas' report given to legislators, ExxonMobil claims it was to receive a tax reduction due to a royalty it paid to PT Asamera Oil Indonesia Ltd.

But Priyono said the royalty has nothing to do with the production-sharing contract between the government and ExxonMobil and "cannot be used as a tax reduction." Priyono added that the dispute is still being deliberated in a tax tribunal.

Meanwhile, Kodeco claims taxes that it owes are calculated on the basis of revenues and costs across all fields in one working area. But BPMigas and the BPKP argue that tax must be calculated separately for each field.

Under that formula, the BPKP says Kodeco owes $32.23 million in tax, while "Kodeco still disagrees with the BPKP," Priyono said.

Three other firms have agreed to settle their debts. BPMigas named them and their debts as Kangean Energy Indonesia Ltd., $45.06 million; Santos UK (Kakap 2) Ltd., $2.39 million; and Golden Spike Raja Blok, $10.62 million.

Contact Eric Watkins at hippalus@yahoo.com.

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