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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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Tuesday, 01 September 15
FOB RICHARDS BAY COAL SWAPS STILL SLIDING; Q2'16 DELIVERY LOST AROUND 6 PERCENT M-O-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery 4Q' 2015 gain week over week but declined month over month.
The 4Q swap was dow ...
Monday, 31 August 15
API 5 FOB NEWCASTLE COAL SWAP GAINS WEEK OVER WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for 4Q’ 2015 delivery down $ 1.85 per MT (-4.23%) month over month to US$ 41.87 per mt. The swap ...
Monday, 31 August 15
Q1'16 CFR SOUTH CHINA COAL SWAP ENDS DOWN MORE THAN 4 PERCENT MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined just US$ 1.91 (3.78%) per MT month over month.
A commodity ...
Sunday, 30 August 15
THE DRY BULK MARKET UNDOUBTEDLY REMAINS WEAK & VOLATILE THIS WEEK
COALspot.com: The BDI slipped further down this week, moving closer to 900 level. This week’s BDI falls 9.15 pct and closed at 903 points. Wh ...
Friday, 28 August 15
DRY BULK SHIP OWNER OPTIMISTIC ABOUT FUTURE PROSPECTS OF THE MARKET: NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk ship owner Golden Ocean appeared optimistic on the long term prospects of the dry bulk market, mainly thanks to an expected resolution of ...
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- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- White Energy Company Limited
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- The University of Queensland
- Independent Power Producers Association of India
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
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