We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Monday, 03 January 11
TAXATION FOR COAL MINING COMPANIES IN INDONESIA - A TAX EXPERTS VIEW
 COALspot.com - Mrs. Sri Wahyuni Sujono, managing partner of SF Consulting has wrote an exclusive report regarding taxation for coal mining companies in Indonesia for COALspot.com subscribers.
Currently, the conduct of Coal exploration, development and production in Indonesia is regulated by:
1.The Izin Usaha Pertambangan (IUP)/Mining Business License; and
2. The Perjanjian Karya Pengusahaan Pertambangan Batubara(PKP2B)/Coal Contract of Work (CCoW).
Tax Regime for a Coal Mining Company
The IUP company is subject to prevailing Indonesian tax laws. Unlike the CCoW, the IUP regulatory regime does not specify distinct tax rules. A CCoW company taxation terms in the Contract is lex specialis– that is, the terms in the contract override the general tax laws. For example, when certain specific tax rules are set out in a Contract, these tax rules take precedence over the prevailing tax laws. Generally, the tax rules in a Contract reflect those that are in force at the time the contract were signed, although there may be some exceptions. Typically, a Contract fixes the tax rules for the duration of the contract (with the exception of second generation CCAs where they generally follow the prevailing tax regulations).
Income Tax Rate
Under the prevailing Tax Law Regulations, a company is subject to corporate income tax on its net taxable profit. Net taxable profit is calculated based on gross income minus deductible expenses. The prevailing corporate tax rate for 2010 and onward is a flat rate of 25% of net taxable profit. If a Contract stipulates a specific corporate income tax rate, the Contract company may not be entitled to 25% corporate tax.
Income
Gross income usually represents sales of mining products and any other income earned by the mining company.
General Expenses
In general, deductible expenses are expenditures incurred to generate, maintain and collect taxable income and generally include an amount paid or accrued for all expenditures attributable to the company’s operations in a year which typically have a useful life of less than one year. Certain expenditures may not be tax deductible under the prevailing Income Tax law, e.g. donations and benefits-in-kind provided to employees. Some types of benefits-in-kind provided at the mining site may be deductible if the mine is located in a remote area (which is usually the case) and an approval from the DGT is obtained.
Exploration and Development Expenses
Exploration and development expenses may include camp construction, drilling, access road, project communication facilities, etc. On-site exploration expenses are generally deductible in the year the expenses are incurred provided the expenses meet the general deductibility criteria required. Exploration and mine development expenses should generally be capitalized and amortized upon spending rather than production.
Depreciation of Fixed Assets
Fixed assets are categorized into four categories, depending on the nature of the asset and its expected useful life. The rate at which the asset can be depreciated will depend upon the category of the asset. Assets are generally depreciated over 4, 8, 16 or 20 years and taxpayers may apply a diminishing balance or straight line approach to depreciation.
Amortization of Intangible Assets
Intangible assets may include pre-operating costs, patents, rights, licenses, etc. Costs incurred in the acquisition of mining rights with a beneficial life of more than one year should be amortized based on a production unit method, not exceeding 20% per annum.
Tax Losses Carried Forward
Tax losses can be carried forward for up to five years under the Tax Law and are utilized on a first-in-first-out basis. Tax losses cannot be carried back.
Reclamation Reserve
For accounting purposes, a mining company is usually required to maintain a reclamation reserve for environmental management and reclamation work during the contract period and at the end of the life of the mine. The reclamation reserve amount should be tax deductible provided that it is calculated in accordance with the prevailing energy/mineral resources sector laws/regulations. If the actual cost exceeds the reserve, the balance is generally tax deductible.
VAT
Under VAT Law No. 42/2009, coal is not subject to VAT. As a consequence, the input VAT paid to the company’s suppliers are not creditable. Some Contracts may adopt a VAT regime different than the prevailing VAT regulations. For example, there may be provision that Input VAT may be creditable/refundable despite the fact that the coal being produced is not subject to VAT. During the pre-production stage of the Contract, the company shall not have any Output VAT due to there being no delivery of mining product at that point. Therefore, VAT overpayment is likely as the company should pay its Input VAT to vendors for purchases of taxable goods/services. Some Contract companies should collect and pay VAT charged by its vendors (i.e. Output VAT) directly to the State Treasury (act as a VAT collector) as required by the relevant Contract.
Withholding Tax
The Contract company is obliged to withhold income tax from payments of dividends, interest, royalties and most types of services. The Withholding tax rate will depend on the type of service and whether the service provider is a resident or non-resident that stipulated in the tax rules Contract. The general withholding tax rate for services is 2%. The Withholding tax on dividends, interest, royalty paid to Indonesia tax resident is at 15% while for non-resident is set at 20%, though this rate is reduced by most of Indonesia’s double tax avoidance agreements. Some Contracts may provide a reduced Withholding tax rate into nil or 7.5%.
OTHER TAXES
Royalties
Royalties are payable quarterly to the Government based on the actual volume of production according to details set out in the IUP/CCoW. The royalty is tax deductible.
Land and Building Tax
The company is required to pay land and building tax as set out in the IUP/CCoW. Dead rent is an annual charge based on the number of hectares in the Mining Area. The land and building taxes are deductible for income tax.
To download this report click here.
Writer’s Profile :
Mrs. Sri Wahyuni Sujono, graduated with a Business Administration degree from the University of Wisconsin-Madison, USA. She is a certified Tax Attorney, Tax Consultant and holds a Brevet C – the highest working license qualification, and is the managing partner of SF Consulting. Sri also has expertise outside tax consultancy; she is a Chartered Financial Consultant (ChFC) and a qualified lawyer, giving a more holistic outlook and approach to her services.
Sri has had over fifteen years of experience of tax consulting with Arthur Andersen and Ernst and Young Indonesia; three years of which she was a Tax and Business Partner. She is the Vice Chairman of the Taxation Committee at the Indonesian Chamber of Commerce (KADIN), the Head of Foreign Affairs in the Indonesian Tax Consultant Association (IKPI) and sits in the Board of Experts in the Indonesian Chinese Association (INTI).
Disclaimer: This report has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this report without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this report, and, to extent permitted by law. SF Consulting and COALspot.com, its directors, members, employees, agents do not accept or assume any liability, responsibility or duty of care of any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this report or for any decision based on it.
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Tuesday, 14 September 10
MID HIGH TEENS FROM WCI, AND HIGH TEENS FROM ECI TO CHINA - BRS
A fairly flat market for the dry bulk segments this week, although the Panamaxes jumped on the back of strong grain exports in the Atlantic. It ...
Tuesday, 14 September 10
HIGH CHARTERING ACTIVITY NEEDS TO KEEP UP FOR DRY BULK RATES TO REMAIN HIGH
Last week’s increase of spot chartering activity pushed dry bulk freight rates to new highs, after a less than lackluster summer. As a result, ...
Monday, 13 September 10
GLENCORE BUYS STAKE IN MINER BUMI
The Jakarta globe reported that, Switzerland-based Glencore International, the world’s largest commodities trader, has quietly acquired a $200 ...
Monday, 13 September 10
IT'S JAI INDONESIA FOR OUR POWER FIRMS
Indian power producers have been compelled to look abroad for fuel to run upcoming facilities, as domestic generation is unlikely to be able to meet ...
Monday, 13 September 10
CIL IN TALKS WITH SHIPPING CORP TO FORM JV FOR COAL IMPORTS
Shipping Corporation of India, the largest domestic shipping liner, may form a joint venture with Coal India for coal imports, a top company officia ...
|
|
|
Showing 5611 to 5615 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Marubeni Corporation - India
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Planning Commission, India
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
|
| |
| |
|
