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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, 05 October 15
Q1 & Q2 2016 DELIVERY SWAPS DECLINED M-M AND W-W THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.36 per ton (0.85%) month over month to US$ 42.12 per ton. The ...
Monday, 05 October 15
Q1' 16 CFR SOUTH CHINA COAL SWAP CLOSED US$ 48.05 PER TON
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down US$ 0.47 (0.96 %) per ton month over month.
A commodity swap is ...
Monday, 05 October 15
SMALL DECLINE IN 2014 SHIP OPERATING COSTS - MOORE STEPHENS
Total annual operating costs in the shipping industry fell by an average of 0.8% in 2014. This compares with the 0.3% average fall in costs recorde ...
Sunday, 04 October 15
THE INDO-INDIA FREIGHT MARKET REMAINS UNDER PRESSURE
COALspot.com: The BDI closed on Friday (2 Oct 2015) at 889 points, down by 54 points compared to previous Friday's closing ( 24 Sept 2015) of 9 ...
Friday, 02 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
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- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Australian Coal Association
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
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