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Wednesday, 23 September 15
INDONESIA: NEW REGULATION APPLIES FINAL INCOME TAX TO MINERAL AND COAL SALES - FLORENCE GRACIA SANTOSO
 To increase state revenue from the mining sector, the Government of Indonesia has imposed a new final income tax on any sale of mineral and coal, adding to the burden on the Indonesian mining industry. The new income tax, i.e. Article 22 Income Tax, is regulated under Minister of Finance ("MOF") Regulation No. 107/PMK.010/2015 regarding the Collection of Withholding Tax in Connection with Payment for Delivery of Goods and Imports or Other Business Activities. The regulation came into force 60 days after its issuance on June 8, 2015. This new regulation is the fourth amendment of MOF Regulation No. 154/PMK.03/2010 regarding Article 22 Income Tax.
Article 22 Income Tax, at the rate of 1.5%, now applies to any sale, either domestic or export, of non-processed or non-refined minerals (metal, non-metal and stone) and coal. Exporters must pay the income tax to the state treasury through a post office, foreign exchange bank or any bank appointed by the MOF. Evidence of payment will be verified by the Directorate General of Customs and Excise as a required supporting document for the export notification and will be used as a basis to issue an export clearance.
This income tax is only applicable to holders of a mining business license (Izin Usaha Pertambangan). It does not apply to holders of a Contract of Work (Kontrak Karya) or Coal Contract of Work (Perjanjian Kerjasama Pengusahaan Pertambangan Batubara), who are subject to different financial obligations under their respective contracts.
Since it is a final income tax, this tax will be imposed on the gross income of the company without deducting any expenses incurred to produce, collect or maintain such income. This means that the company must pay the income tax even if the company is not profitable, since this tax is payable upon any sale of minerals and coal.
Income that is subject to final income tax cannot be combined with other income (which is subject to non-final income tax) in the calculation of income tax as reflected in a company’s annual tax return. Final income tax paid under this rule cannot be deducted against non-final income tax.
In an attempt to promote domestic processing and refinery activities, this income tax will not apply to any refined minerals or processed coal. Only minerals in the form of ore or concentrate and non-agglomerated coal are subject to the 1.5% income tax. Under current rules, only a few minerals (copper, iron, manganese, lead and zinc) are allowed to be exported not in refined form (only processed to a certain level). Other minerals cannot be exported unless refined as required under Minister of Energy and Mineral Resources ("MEMR") Regulation No. 1 of 2014 as amended by MEMR Regulation No. 8 of 2015.
The Government of Indonesia has made efforts to reduce the export of unrefined minerals by imposing complicated, lengthy and expensive procedures for such exports. Mineral exporters must first register with the Ministry of Trade to obtain a Registered Exporter Certificate for the Export of Mining Products (Eksportir Terdaftar Produk Pertambangan). This certificate is valid for three years but may be extended an unspecified number of times. To obtain the certificate, the exporter must obtain an approval from the Directorate General of Mineral and Coal ("DGMC").
Another approval from the DGMC is required for the export of unrefined (processed) minerals. This approval is only valid for six months and may be extended. Before any mining products are exported they must first be verified and approved by a Ministry of Trade-registered surveyor to ensure they have been processed/refined to the required standard.
In addition, the export of unrefined (processed) minerals is subject to a very high export tax rate. The export tax rate in 2015 has ranged from 30% to 40% which is scheduled to increase to 50% to 60% as of January 1, 2016 until January 12, 2017. As of January 12, 2017, under current rules, only refined minerals can be exported.
By Florence Gracia Santoso
SSEK Indonesian Legal Consultants
 About Florence Gracia Santoso
Florence is experienced in energy, infrastructure, investment and mergers and acquisitions, and has been involved in a number of acquisitions involving industrial and trading companies. Since joining SSEK Legal Consultants in 2010, Florence Gracia Santoso has been involved in numerous major mining transactions.
This article is intended for informational purposes only and does not constitute legal advice. This article should not be acted upon in any specific situation without appropriate legal advice.
If you believe an article violates your rights or the rights of others, please contact us.
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Monday, 26 October 15
CFR SOUTH CHINA COAL SWAPS CLOSE DOWN 4.3% AS DEMAND CONCERNS WEIGH
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US$ 1.48 (3.02 %) per ton month over month.
A commodity sw ...
Sunday, 25 October 15
ANOTHER DISAPPOINTING WEEK FOR PANAMAX; INDEX FELL 5.4 PERCENT W-W
COALspot.com: The BDI was slightly up by 2.65 pct closing at 774 points mainly because of Cape index which was up by 10.85 pct closing at 1461 poin ...
Sunday, 25 October 15
DRY BULK SHIP OWNERS ARE LOOKING TO CHINA'S POLICIES FOR CUES ON FUTURE MARKET DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
China’s hard or softer landing is a thing which has troubled dry bulk shipping for a couple of years now, as owners have been hit by the coun ...
Friday, 23 October 15
WILL INDIAN DOMESTIC COAL PRICES BE ABLE TO COMPETE IMPORTED COAL PRICES IF THE CURRENT TREND CONTINUES?
COALspot.com: The Most of the Indian end-users are waiting for last minute purchase to enjoy every drop in price. Coal procurement managers are als ...
Friday, 23 October 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING OCTOBER 17 DECLINED FOR THE SECOND STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.6 million shor ...
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- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Planning Commission, India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
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