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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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Friday, 11 September 15
U.S'S WEEKLY COAL PRODUCTION WAS ALMOST FLAT PAST WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.6 million shor ...
Thursday, 10 September 15
U.S. H1' 15 STEAM COAL EXPORTS FELL BY 21 PER CENT Y-Y: EIA
Coal Trade
Slower growth in world coal demand, lower international coal prices, and higher coal output in other coal-exporting countries have all ...
Thursday, 10 September 15
INDONESIAN COAL BENCHMARK PRICE HITS A NEW LOW OF $58.21 PER TON
COALspot.com - The Director General of Mineral and Coal of Indonesia once a again revised down Indonesian coal benchmark price to US$ 58.21 per MT ...
Thursday, 10 September 15
IF NOT NOW, WHEN? - GIANNIS ANDRITSOPOULOS
Our industry is well known to be cyclical with some cycles lasting longer than others. Despite the fact that these shifts in the behavior of the fr ...
Wednesday, 09 September 15
FOB INDONESIA COAL SWAP LOSE GROUND ON SLOWING DEMAND
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and week over week.
The 4Q swap declined $ 1.92 (-4.52%) per t ...
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- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- Australian Coal Association
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
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