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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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Thursday, 15 October 15
INDONESIA COAL PRICE REFERENCE FALLS FOR SEVEN STRAIGHT MONTH IN OCTOBER
COALspot.com - The Director General of Mineral and Coal of Indonesia once a again revised down Indonesian coal benchmark price this month.
The ...
Thursday, 15 October 15
Q1' 16 FOB RICHARDS BAY COAL SWAP ADVANCED 2 PER CENT WEEK OVER WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gain week over week and declined month over month.
The Q4 swap was dow ...
Tuesday, 13 October 15
DRY BULK SHIPPING FLEET NET EXPANSION WAS 1.3% DURING THIRD QUARTER, BUT ORDERBOOK REDUCED TO 17% OF THE TRADING FLEET
If the dry bulk market is to rebound on a sustainable level, it needs to limit the tonnage expansion, at least until demand picks up again, as Chin ...
Tuesday, 13 October 15
FOB NEWCASTLE COAL SWAP DECLINED 2 PER CENT MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.46 per ton (1.08%) month over month to US$ 42.17 per ton. The ...
Monday, 12 October 15
CFR SOUTH CHINA COAL SWAPS GAIN W-W; SLIGHTLY DOWN M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US cents 3 (0.06 %) per ton month over month.
A commodity ...
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- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
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- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
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- Parliament of New Zealand
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- Mercator Lines Limited - India
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- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
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- Goldman Sachs - Singapore
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
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- Merrill Lynch Commodities Europe
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- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
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- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
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- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
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- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
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- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
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