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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, 28 August 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING AUGUST 22 ROSE FOR THE THIRD STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.5 million shor ...
Friday, 28 August 15
BANPU STRENGTHENS GROWTH PLAN
Coal Business: Asia-Pacific Synergies Increase Competitiveness for Premium Export Market.
Banpu Public Company Limited (BANPU) strengthens its ...
Thursday, 27 August 15
RATES FOR CAPES REMAINED ON A FREE FALL LAST WEEK - INTERMODAL
COALspot.com: Keeping everyone on their toes with the volatility seen in August, the Dry Bulk market undoubtedly remains a steady provider of chall ...
Wednesday, 26 August 15
MARKET INSIGHT - STRATOS TINIAKOS
It’s always interesting to comment on the market when big economies around the world are facing troubling times. Following the collapse of th ...
Wednesday, 26 August 15
2Q'16 FOB INDONESIA COAL SWAP FALLS NEARLY 4.76 PER CENT M-O-M
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and week over week.
The 4Q swap was declined $ 2.20 (-5.13%) p ...
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- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Mercator Lines Limited - India
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
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