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.
|
|
Monday, 23 August 10
NOBLE RESOURCES AND PAN ASIA INK MAJOR COAL DEAL
Pan Asia Corporation Limited has, via Innovation West Pty Ltd, entered into a binding coal purchase & finance agreement with Noble Resources Pte ...
Monday, 23 August 10
THE FREIGHT MARKET IS EXPECTED TO BE FIRM FOR NEXT COUPLE OF WEEKS - VISTAAR SINGAPORE
COALspot.com: The BDI continued to rise this week by 11.67 pct with the other sectors also keeping the moment. The cape size index also was up by 11 ...
Friday, 20 August 10
JAKARTA TO HOST 9TH ASIA PACIFIC MINING CONFERENCE AND EXHIBITION IN OCTOBER
ASEAN Federation of Mining Association (AFMA), an association of mining groups in Southeast Asia, will hold the 9th Asia Pacific Mining Conference a ...
Friday, 20 August 10
OVERSEAS AND GENERAL SUBSIDIARY INKS US$52M JONGKANG COAL SALES CONTRACT - PROACTIVE INVESTORS
Proactive Investors reported that, overseas and General (ASX: OGL) has reported that its Indonesian majority owned subsidiary, PT OGL Indotrade, has ...
Friday, 20 August 10
POWER COS SEEK MINING PARTNERS TO BID FOR 1,920-MW PROJECT
"A joint venture between the Maharashtra and Tamil Nadu governments for a pit-head power project, has been allotted the biggest coal block yet ...
|
|
|
Showing 5651 to 5655 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Australian Coal Association
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Planning Commission, India
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
|
| |
| |
|
