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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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Sunday, 06 September 15
AUTOMATION AND TECHNOLOGY IS CERTAINLY PART OF THE SOLUTION FOR IMPROVING PERFORMANCE AND EFFICIENCY TO MAKE THE MINE OPERATIONS MORE PROFITABLE, HOWEVER............ - LUKE JALSEVAC
"The Technology and Innovation in Mining 2015" production team at Information Exchange Group interviewed Luke Jalsevac, Director, Busines ...
Sunday, 06 September 15
THE CAPE SIZE INDEX ROSE 10.83 PER CENT WEEK OVER WEEK
COALspot.com: The BDI, the Baltic exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, declined o ...
Saturday, 05 September 15
DRY BULK MARKET MAY SUFFER NOW, BUT IS BOUND FOR A RECOVERY THANKS TO A LIMITED FUTURE FLEET GROWTH - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The slow increase of dry bulk tonnage growth this year could turn into a solid indicator of the market’s future prospects. According to a rec ...
Friday, 04 September 15
U.S. COAL PRODUCTION FOR THE W/E AUGUST 29, UP SLIGHTLY; FALL 4.5 PERCENT Y-Y: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.7 million shor ...
Friday, 04 September 15
GOVERNORS WILL HAVE THE POWER TO REVOKE MINERS' PERMITS: ENERGY MINISTRY - JG
Starting Oct. 1, Indonesia's governors will lawfully become "executors" in revoking the licenses of miners that fail to secure a &quo ...
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- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- PTC India Limited - India
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
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