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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, 28 September 15
CAPESIZE FLEET INCREASES BY JUST 1 VESSEL DURING LAST 12 MONTHS, IN POSITIVE SIGN FOR DRY BULK SHIPPING MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
After a rather tumultuous period, the shipping industry and more particular the dry bulk market has started to adjust to the new realities of globa ...
Monday, 28 September 15
Q1'16 CFR SOUTH CHINA COAL SWAP ROSE 2.73 PER CENT M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery moved upward US$ 1.45 (3.04 %) per ton month over month.
A commodity ...
Sunday, 27 September 15
THE PANAMAX INDEX FELL 1.19 PCT WEEK OVER WEEK
COALspot.com: The BDI closed Friday (25/09/2015) at 943 points, down by 17 points compared to previous Friday closing (18/09/2015). The BDI wa ...
Friday, 25 September 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING SEPTEMBER 19 ROSE 2.5% PER CENT W-W
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.8 million shor ...
Wednesday, 23 September 15
CAPESIZE: SPOT RATES HAVE INCREASED MORE THAN 70 PER CENT DURING LAST WEEK
Dry Bulk owners, always look at September as the time that the market “signals” what lies ahead for the remainder of the year. The Chin ...
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- Sical Logistics Limited - India
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- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Wilmar Investment Holdings
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- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
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- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
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- Australian Coal Association
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- Merrill Lynch Commodities Europe
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- Electricity Authority, New Zealand
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- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- McConnell Dowell - Australia
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- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
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- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
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- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
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- GMR Energy Limited - India
- CNBM International Corporation - China
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- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
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- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
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- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
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- Kaltim Prima Coal - Indonesia
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- VISA Power Limited - India
- Power Finance Corporation Ltd., India
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- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
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- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
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- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
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- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
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- South Luzon Thermal Energy Corporation
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- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
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