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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, 17 September 15
MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
Having experienced, as it was much anticipated, a poor 1st half combined with negative forecasts, summer, in sharp contrast, proved to be more hope ...
Wednesday, 16 September 15
SLOWER GROWTH IN WORLD COAL DEMAND AND LOWER INTERNATIONAL COAL PRICES LED A DECLINE IN INDONESIAN COAL PRODUCTION
COALspot.com: Slower growth in world coal demand particularly China and lower international coal prices have led to a decline in Indonesian coal pr ...
Wednesday, 16 September 15
HIGHER TAXES COULD LEAD GREEK SHIP OWNERS OUT OF THE COUNTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
A potential taxation overhaul of the shipping industry in Hellas, which could see the loss of particular tax benefits for ship owners, could lead t ...
Tuesday, 15 September 15
WORLD SEABORNE TRADE: ENTERING INTO A ROLE REVERSAL? - CLARKSONS
Over the past decade, world seaborne trade growth has been dominated by dry bulk and container trade. However, developments in the global economy t ...
Tuesday, 15 September 15
Q2'16 RICHARDS BAY COAL SWAPS DIP TO $ 51.10 PER TON
COALspot.com: API4 FOB Richards Bay Coal swap for delivery 4Q' 2015 declined week over week and month over month.
The 4Q swap was down US$ ...
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- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Central Electricity Authority - India
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Australian Coal Association
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
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