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.
|
|
Wednesday, 25 August 10
GOVT SHOULD ALLOW DUTY-FREE IMPORT OF THERMAL COAL: ASSOCHAM
Industry body Assocham Wednesday said the government should allow duty free import of thermal coal to bring down power tariffs in the country.
&q ...
Wednesday, 25 August 10
INDIAS ADANI GROUP TO BUILD COAL RAILWAY IN INDONESIA
COALspot.com: India’s Adani Group, Indonesia’s state coal producer PT Tambang Batubara Bukit Asam (PTBA), and the South Sumatra provinci ...
Wednesday, 25 August 10
CME GROUP WILL LAUNCH NEW COAL CONTRACTS
Press Release: CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of trading and clearing ser ...
Tuesday, 24 August 10
INDIA IMPORTS 1.3 MILLION TONS COAL LAST WEEK
COALspot.com: India has imported 1.3 million tons of non - Coking coal and 468,229 Mt of coking coal for the period 16 - 22 August 2010 ...
Monday, 23 August 10
COAL FOR FAST-TRACK PROGRAM ASSURED
Antara and the Jakarta globe reported that, the coal supply for the government’s 10,000 megawatt “fast- track” program was assured ...
|
|
|
Showing 5646 to 5650 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Larsen & Toubro Limited - India
- The University of Queensland
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- White Energy Company Limited
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
|
| |
| |
|
