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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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Wednesday, 21 October 15
RUSSIA'S CARBO ONE COAL SALES TO HIT 50 MLN T/YR - JACQUELINE HOLMES
COALspot.com: Russia's Carbo One has become one of the world's leading physical coal traders with an annual volume approaching 50 million t ...
Wednesday, 21 October 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
In today’s dry bulk market, both freight rates and asset prices are creating mixed feelings to seasoned ship owners, who tend to instinctivel ...
Wednesday, 21 October 15
INDONESIAN COAL MINER BUKIT ASAM POSTS POSITIVE PERFORMANCE DURING FIRST THREE QUARTERS OF 2015
COALspot.com: Indonesian publicly listed and state controlled coal miner PT. Bukit Asam has announced that, the company’s coal sales up 8 per ...
Wednesday, 21 October 15
LOWER DEMAND HIT Q1' 16 INDONESIA COAL SWAPS
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 1.88 (-4.71%) per t ...
Tuesday, 20 October 15
SHIPBROKER SEES CAPESIZE RATES EASILY REACHING $25,000/DAY BY YEAR-END : NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future course of the dry bulk market has been troubling market participants for quite some time now, as the “elusive” freight rate ...
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- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- White Energy Company Limited
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
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