JAKARTA: Indonesian Investment Coordinating Board (BKPM) will recommend the refinery construction in Balongan to gain a tax holiday incentive, a postponement facility for tax payment within a certain period.In addition, Pertamina will engage Kuwait Petroleum Corporation, a Middle East-based company, to handle the oil refinery construction in Balongan, West Java.Head of BKPM Gita Wirjawan reasoned that the recommendation for tax holiday facility was granted to the refinery in Balongan considering the high investment of US$6 billion-US$8 billion. Yesterday, Memorandum of Understanding (MoU) for the construction has been signed with Kuwait Petroleum Corporation. Being large-scale investment and supporting national energy security are our consideration for granting the incentive, he said yesterday.According to Gita, the tax holiday incentive only is given to pioneer companies of investment value above US$500 million as well as absorbs a lot of employees. Thats just a proposal which has not been approved yet, he affirmed.On the other hand, small-scale investment under US$500 million, as Gita explained, still obtains tax incentive in the term of tax allowance referring on Presidential Decree No.62/2008 on Income Tax Facility for Investment in Certain Business Field and/or in Certain Areas.Now we are revising the Presidential Decree No.62 that will be issued in the near future and will support downstream industry's interests, he clarified.Associated with tax holiday, BKPM also proposes the incentive period to last 4 to 8 years. That will be hard, if the incentive period is more or less than proposed, Gita answered when questioned on the reason of the period proposal which is set for 4 years- to 8 years.Government, last week, had announced eight decrees on taxation, including Presidential Decree No.94/2010 on Calculation of Taxable Income and Income Tax Payment in Current Year as legal support for Ministry of Finance in providing tax holiday.Minister of Finance Agus Martowardojo himself confirmed that the technical implementation for tax holiday is still being finalized in coordination with related ministries/institutions (K/L). Furthermore, the tax holiday regulation will be formulated in the form of Minister of Finance's decree.However, principally, the tax holiday incentive will be only granted for pioneer industries having five criteria as creating a lot of jobs, transferring new technologies, at small and remote regions, as well as providing added value for other industries and Indonesian economy. (T01/NOM)
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