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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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Tuesday, 20 October 15
FOB RICHARDS BAY COAL SWAPS SINK INTO RED THIS PAST WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Tuesday, 20 October 15
API 5 FOB NEWCASTLE COAL SWAP CLOSED NEGATIVE
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $1.23 per ton (2.86%) month over month to US$ 41.80 per ton. The ...
Monday, 19 October 15
RUSSIA MAJOR COAL MINER KRU CUTS 4.5 MLN T/YR "UNPROFITABLE" EURO SALES - JACQUELINE HOLMES
COALspot.com: Kuzbassrazrezugol (KRU), one of Russia's largest producers of high-quality coal, plans to cut its coal exports in 2016 by about 4 ...
Monday, 19 October 15
CFR SOUTH CHINA COAL SWAP CLOSED AT $48.68 PER TON
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US cents 55 (1.12 %) per ton month over month.
A commodity ...
Monday, 19 October 15
KOMIPO SEEKS 1.28 MILLION T/Y COAL FOR DEC 2015 - Q2 2016
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 1,280,000 Metric Tons (MT) of minimum 4,600 kc ...
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- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- GMR Energy Limited - India
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
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