Full Deduction of Subsurface LBT during Exploration Phase (PMK-267/PMK.011/2015, 31 December 2014)

what happens?

On December 31, 2014, Ministry of Finance (MoF) has issued a favorable LBT regulation for upstream oil & gas industry providing a full deduction of Subsurface Land and Building Taxes (LBT) during exploration phase. The abatement is governed under MoF Regulation No. 267/PMK.011/2014 (PMK-267).

PMK-267 is the Government’s response to the controversy of exploration LBT imposition for the PSC signed post GR-79/2010 (GR-79). This incentive is intended to solve one of exploration problems in order to accelerate exploration activities.


LBT incentive is limited to subsurface LBT for PSC Companies who are in exploration period. Government provides 100% deduction on subsurface LBT during exploration phase. Deduction will begin to be given for 2015 LBT Payable Notification Letter (SPPT PBB). Tax Office will raise SPPT PBB with the deduction amount stated on it as the evidence that the deduction has been granted

Who are eligible?

PSC Contractors who have the contract signed after commencement of GR-79 and have been filed LBT Returns are eligible to utilize the facility. In addition, a recommendation letter from Minister of Energy and Mineral Resources (MoEMR) also required proving the PSCs are in exploration stage.


Deduction will be given every year for 6 years exploration periods. An extension may be granted maximum up to 4 years, based on MoEMR recommendation stating that the PSC is on exploration phase. It is mean that PSC Company may waive payment of subsurface LBT for 10 years, as per normal exploration period in Indonesia PSC system. After 10 years exploration periods, PSC must pay the subsurface LBT.