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, 27 July 10
DRY BULK SPOT CARGO DEMAND SHARPLY UP, TRIGGERING RISE IN RATES
Hot on the heels of the dry bulk market’s first weekly gain in almost two months, Monday began on a similar note, with the Baltic Dry Index (B ...
Tuesday, 27 July 10
KANGAROO RESOURCES INKS 297MT COAL RESOURCE FOR TANUR JAYA PROJECT
Kangaroo Resources has reported JORC Code compliant open cut Coal Resources totalling 297 million tonnes for the Tanur Jaya Coal Project in East Kal ...
Monday, 26 July 10
INDONESIAN COAL PRICE REFERENCE FOR JULY 2010 IS US$ 96.65 PER TON FOB VESSEL
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
Monday, 26 July 10
BHATIA INTERNATIONAL, MIGHT GRAB THE MAJORITY OF COAL SUPPLY ORDER FROM MAHAGENCO
COALspot.com: Maharashtra State Power Generation Co., a provider of electricity to India’s commercial hub Mumbai, has received price bids from ...
Monday, 26 July 10
CEMENT MAKERS EXPLORE NEW FUELS TO REPLACE COAL - ECONOMIC TIMES
Economic Times reported that, As the cement industry reels under high raw material costs and reduced coal linkages, companies are exploring alternat ...
|
|
|
Showing 5696 to 5700 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Australian Coal Association
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- PTC India Limited - India
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- The University of Queensland
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
|
| |
| |
|
