Capital Participation of Oil/Gas Revenue Sharing Fund and Local Tax ID

CAPITAL PARTICIPATION OF OIL/GAS REVENUE SHARING FUND

IN BOJONEGORO MUNICIPALITYBY :

HERRY SUDJARWO, SH. MMHEAD OF OFFICE OF REVENUE BOJONEGORO MUNICIPALITY

NATIONAL SEMINAREXTRACTIVE INDUSTRY GOVERNANCE

IN BOJONEGORO MUNICIPALITY

JAKARTA, MAY 23rd 2012

Philosophical Based

OIL/GAS IS UNRENRENEWABLE NATURAL RESOURCE Will eventually run off Huge amount of revenue in short period (WINDFALL) and gradually

decreasing Oil/gas revenue sharing fund must have sustainable benefit that can

be preserve for future generation Capital Particpiation is to anticipate if the revenue form oil/gas stop

OIL/GAS REVENUE IS FLUCTUATIVE Price determined by the market, a floating mechanism Local needs to anticipate the local budgeting when the price is

decreasing INCREASING LOCAL REVENUE (PAD)

PROCESS and FORM of INNOVATION

Intensive communication among stakeholders in Bojonegoro on discussing in how to better use the oil/gas revenue

Initiative and local innovation from other oil/gas resource-rich region in Indonesia

To formulate and to legalized it in the Bojonegoro Local regulation (Peraturan Daerah Kabupaten Bojonegoro) on capital participation received from oil/gas revenue sharing fund/DBH

LEGAL BASIS

LOCAL REGULATION of BOJONEGORO MUNICIPALITY NUMBER 11 YEAR 2011 on CAPITAL PARTICIPATION IN BOJONEGORO MUNICIPALITY

OBJECTIVES

Investing the region’s resources in order to receive economy, social and other benefits

In order for the revenue sharing fund to be used sustainably, because in time of the Revenue Sharing ran out, the local govt. can maintain its service to the public

ALLOCATION FOR CAPITAL PARTICIPATION OF OIL/GAS REVENUE SHARING IN BOJONEGORO

MUNICIPALITY

NO LOCATION AMOUNT YEAR

1 BANK JATIM19.000.000.00020.000.000.00027.000.000.000

YEAR. 2011YEAR. 2012YEAR. 2012

2 PD BPR BOJONEGORO 4.000.000.0002.000.000.000

YEAR. 2011YEAR. 2012

3 PT. BBS 10.000.000.000 YEAR. 2012

4 BPR JATIM BOJONEGORO 500.000.000500.000.000

YEAR. 2012YEAR. 2013

ACHIEVED RESULTS

Yielding local revenue/PAD from managing separated local fund (devident)

As an adding capital for region-owned company to do their company activities

As endowment fund for the future

CHALLENGES

Capital participation attached to risks as any other type of investment

The investment will change according to the change of the policy

Revenue from this investment will be incorporated within the local budget/APBD so we cannot specifically use the revenue for certain development only.

The regulation still haven’t regulate the mechanism on fund management and use

NEXT AGENDA

MODEL IMPROVEMENT◦Broaden investment target location◦Make clear on the management and utilization

mechanism◦Transparency and Accountability

THE NEED FOR SPECIFIC LOCAL REGULATION◦ Related to oil/gas revenue sharing fund◦ Amount of investment is regulate under

specific regulation

BRANCH/ LOCAL TAX ID IN BOJONGORO MUNICIPALITY

JAKARTA, May 23rd 2012

BACKGROUND Procurement by partner from outside of

regions so the tax will be paid to the region where the partners is originate (not to the regions where the activity is conducted)

Intensification and intensification of local revenue especially from Balance Fund (Tax Revenue Sharing Fund)

OBJECTIVES

• To increase local revenue from Tax Revenue Sharing Fund

• To make easy in monitoring tax obligatory• To increase role and awareness of

taxpayer to the region where the partners conduct the work

PROCESS AND FORM OF INNOVATIONSIntensive communication between stakeholders

in Bojonegoro on how to utilize oil/gas fundThe reinforcement of Regent’s Regulation

number 33 year 2009 on Branch/Local Tax ID specifically for procurement under the local budget/APBD

Formulate and legalize innovation under Local regulation of Bojonegoro Municipality (Peraturan Daerah)

Local regulation in Bojonegoro number 25 tahun 2011 on Registration of Taxpayer in Brnach/Location for the parties conducting procurement in Bojonegoro Municipality

MAIN POINTS

• Partners doing the procurement and Tender Winner in Bojonegoro Municipality is obligatory to obtain Tax ID issues by KPP PRATAMA Office in Bojonegoro

• To those who already owned Tax ID as taxpayer issued form outside of Bojonegoro must register themselves as taxpayer in Bojoengoro

• For those opening tender for procurement must stated in the contract the obligation of Tender winner to obtain Bojonegoro Tax ID

Registration Procedure Registration procedure refer to rules and

regulation enacted, implemented by KPP BOJONEGORO

Branch/Local Tax ID is valid as long as the activity of procuring conducted within Bojonegoro Municipality

After the activity is finalized, partners can send request to eliminate the branch/local Tax ID

The elimination of local Tax ID conducted by KPP PRATAMA Bojonegoro

SANCTION

Violation of this regulation will be sanctioned with:Administration sanction in the form of written warning and embargo of working permit for activities related to procurement of good and services

Achieved Result

To put the revenue sharing/DBH according to its portion

The increase in revenue sharing tax received especially from PPh Psl. 21, 25/29 WPOPDN :

Year 2010 : 6.553.804.156Year 2011 : 8.183.321.347

TERIMA KASIHThank You