Risk analysis of tax consolidation application in frontier areas on government income
A country needs stronger incentives to increase exploration investment in high-risk isolated frontier and deepwater areas. Tax consolidation is one of the possible incentives to raise exploration investment level in those frontier areas. Tax consolidation means that expenditures of non-producing con...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Faculty of Management and Human Resource Development, Universiti Teknologi Malaysia
2008
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| Online Access: | http://eprints.utm.my/8618/3/AbdAzizBuang2008_RiskAnalysisOfTaxConsolidation.pdf |
| _version_ | 1825910225034543104 |
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| author | Usman, Rien Handarwati July Buang, Abd. Aziz |
| author_facet | Usman, Rien Handarwati July Buang, Abd. Aziz |
| author_sort | Usman, Rien Handarwati July |
| collection | ePrints |
| description | A country needs stronger incentives to increase exploration investment in high-risk isolated frontier and deepwater areas. Tax consolidation is one of the possible incentives to raise exploration investment level in those frontier areas. Tax consolidation means that expenditures of non-producing contract(s) can be deducted from the income of producing contracts of the same contractor(s) for determination of taxable income. From the government point of view, the application of tax consolidation represents its current investment for future income. In this study, risk analysis of the application of tax consolidation in frontier areas was taken with Monte Carlo simulation to identify its impact on the Government of Indonesia (GOI) income and on the profitability of contractor as well as quantifying the risk involves respectively. The result showed, that from contractor’s financial aspect, tax consolidation was more attractive incentive compared to increase in production sharing split. On the other hand, it was less attractive to the GOI, not only because it reduced GOI’s NPV, but it also posed high risk to the GOI. |
| first_indexed | 2024-03-05T18:13:54Z |
| format | Article |
| id | utm.eprints-8618 |
| institution | Universiti Teknologi Malaysia - ePrints |
| language | English |
| last_indexed | 2024-03-05T18:13:54Z |
| publishDate | 2008 |
| publisher | Faculty of Management and Human Resource Development, Universiti Teknologi Malaysia |
| record_format | dspace |
| spelling | utm.eprints-86182017-02-14T07:08:17Z http://eprints.utm.my/8618/ Risk analysis of tax consolidation application in frontier areas on government income Usman, Rien Handarwati July Buang, Abd. Aziz HC Economic History and Conditions HJ Public Finance A country needs stronger incentives to increase exploration investment in high-risk isolated frontier and deepwater areas. Tax consolidation is one of the possible incentives to raise exploration investment level in those frontier areas. Tax consolidation means that expenditures of non-producing contract(s) can be deducted from the income of producing contracts of the same contractor(s) for determination of taxable income. From the government point of view, the application of tax consolidation represents its current investment for future income. In this study, risk analysis of the application of tax consolidation in frontier areas was taken with Monte Carlo simulation to identify its impact on the Government of Indonesia (GOI) income and on the profitability of contractor as well as quantifying the risk involves respectively. The result showed, that from contractor’s financial aspect, tax consolidation was more attractive incentive compared to increase in production sharing split. On the other hand, it was less attractive to the GOI, not only because it reduced GOI’s NPV, but it also posed high risk to the GOI. Faculty of Management and Human Resource Development, Universiti Teknologi Malaysia 2008-06-11 Article PeerReviewed application/pdf en http://eprints.utm.my/8618/3/AbdAzizBuang2008_RiskAnalysisOfTaxConsolidation.pdf Usman, Rien Handarwati July and Buang, Abd. Aziz (2008) Risk analysis of tax consolidation application in frontier areas on government income. Jurnal Kemanusiaan (11). pp. 80-100. ISSN 1675-1930 http://www.fppsm.utm.my/download/cat_view/13-jurnal-kemanusiaan/26-bil-11-jun-2008.html |
| spellingShingle | HC Economic History and Conditions HJ Public Finance Usman, Rien Handarwati July Buang, Abd. Aziz Risk analysis of tax consolidation application in frontier areas on government income |
| title | Risk analysis of tax consolidation application in frontier areas on government income |
| title_full | Risk analysis of tax consolidation application in frontier areas on government income |
| title_fullStr | Risk analysis of tax consolidation application in frontier areas on government income |
| title_full_unstemmed | Risk analysis of tax consolidation application in frontier areas on government income |
| title_short | Risk analysis of tax consolidation application in frontier areas on government income |
| title_sort | risk analysis of tax consolidation application in frontier areas on government income |
| topic | HC Economic History and Conditions HJ Public Finance |
| url | http://eprints.utm.my/8618/3/AbdAzizBuang2008_RiskAnalysisOfTaxConsolidation.pdf |
| work_keys_str_mv | AT usmanrienhandarwatijuly riskanalysisoftaxconsolidationapplicationinfrontierareasongovernmentincome AT buangabdaziz riskanalysisoftaxconsolidationapplicationinfrontierareasongovernmentincome |