This article examines two questions: (1) whether the Production Sharing Contract in oil and gas sectors between different countries should be considered as an international agreement or a private agreement; and (2) how to formulate uplift in the PSC which contains the value of equity for investors and the State. In the Production Sharing Contract, there is problem of setting the tax on oil and gas sector particularly uplift policy relating to the taxation of income in the state revenue sources. This issue is related to the return of controversy of operational costs recognized by the contractor (cost recovery claim). This tax controversy gave rise to uplift that is only levied on oil and gas State owned Enterprises contracting partners in the scheme of the Joint Operating Body, especially in the old fields with advanced technology (Enhanced Oil Recovery). The controversy is related to the declining production and increased production costs that are recognized by the contractor.

I. Introduction
 II. Position of Oil and Gas ProductionSharing Contract in Indonesia
  A. The Constitution of the Republic of Indonesia of 1945
  B. Law No. 22 of 2001
  C. PSC
  D. International Contract
 III. Uplift as a New Instrument Imposed on TaxableIncome in Oil and Gas Sector
 IV. Conclusion

• Arina N. Shebubakar(University of Indonesia)