Comparison of Gross Split Production Sharing Contract and Taxation Aspects for Economic Incentives in Indonesia

Dewi Permatasari, Fajril Ambia, Eny Kusrini, Muhammad Zulkarnain

Research output: Contribution to journalArticlepeer-review


The objective of this study is to evaluate the comparison of economic incentives from the aspect of production sharing contract gross split, and taxation, especially to determine the balance of incentives that the government can provide either in taxation or additional discretion splits to contractors in the Alfa working area, which is an oil and gas operational work area located in Kalimantan. The method used in this study is a quantitative method, by performing calculations using a gross split profit sharing scheme to observe the economic comparison of Alfa working area without discretion, with additional discretion and a combination of tax percentages, with various combinations, it provides 25 (twenty-five) scenarios for economic calculations to the Alfa working area. Based on the economic calculation in Alfa's work area, the profitability index (PI) value is 1.09, where this value shows the minimum economic value of the contractor. Based on these scenarios, an economic analysis was obtained with a combination of indirect tax 0-100% and additional discretion split of 0-100%. According to the study's results, if the additional discretion incentive was less than 50%, the contractor's NPV value was negative. On the other hand, 75% discretion was given with indirect tax between 0-50%, and 100% discretion was offered. Through scenario simulation calculation with a PI target of 1.09, the optimum result was obtained with a balanced incentive amount at 50% indirect tax and an additional 92% split discretion.

Original languageEnglish
Pages (from-to)246-256
Number of pages11
JournalInternational Journal of Technology
Issue number2
Publication statusPublished - 2023


  • Discretion
  • Gross split
  • Incentives
  • Indirect tax
  • Profitability index


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