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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, 12 October 15
DRY BULK SHIPPING: MARKETS ARE SLOWLY IMPROVING FROM A VERY LOW LEVEL AS THE DEMAND SIDE FALTERS - HELLENIC SHIPPING NEWS
The dry bulk market is in the midst of a shift in demand patterns, which coupled with a tonnage supply overhang, has been facing headwinds over the ...
Monday, 12 October 15
BDI WEIGHED DOWN BY CAPE
COALspot.com: The BDI (Baltic Dry Index) has come back down again this week. The BDI is a benchmark index used to assess the overall cost of moving ...
Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil pri ...
Friday, 09 October 15
US WEEKLY COAL OUTPUT UP 1.2 PERCENT TO 17.7 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.7 million shor ...
Thursday, 08 October 15
CAPESIZE: MOST PEOPLE AGREE A SPIKE IN RATES WILL HAPPEN; WHEN, HOW LONG AND HOW SUBSTANTIAL? - FEARNLEYS
Cape
Depressives start of the fourth quarter, with c3 approaching USD 12 pmt and c5 presently in the mind 5's. According to Fearnleys ship br ...
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- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- PTC India Limited - India
- Indian Oil Corporation Limited
- Planning Commission, India
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
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