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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, 03 September 15
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO REVISE HBA METHODOLOGY
COALspot.com: Ministry of Energy and Mineral Resources (ESDM) in process to revise Indonesian Coal Price Reference (HBA) and expected to complete b ...
Thursday, 03 September 15
THE CHINESE STOCK MARKET AND THE CHINESE ECONOMY CONTINUE TO SUBSTANTIALLY AFFECT TRADING - INTERMODAL
The last week of the summer season saw the BDI dipping further on the back of another significant drop in rates for Capes, which brought the market ...
Wednesday, 02 September 15
PORT OF NEWCASTLE SHIPPED 13.46 MMT OF COAL IN JULY; UP 0.66 PER CENT M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.224 billi ...
Wednesday, 02 September 15
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
In the beginning of the summer period SnP activity was firm with numerous buyers, coming mainly from Greece and the Far East, inspecting ships and ...
Tuesday, 01 September 15
FOB INDONESIA COAL SWAPS FURTHER SLIDE TO US$ 40.62 PMT; DECLINE 5.34 PERCENT M-O-M
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and slightly dropped week over week.
The 4Q swap was declined ...
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- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- The University of Queensland
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
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