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.
|
|
Thursday, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
Monday, 23 October 23
CHINA SEPT COAL OUTPUT HITS SIX-MONTH HIGH ON RISING POWER DEMAND - REUTERS
China’s September coal output rose 0.4% from August to the highest level since March, official data showed on Wednesday, on rising power dema ...
Monday, 23 October 23
INDIA COAL INVENTORIES DROP AT FASTEST PACE IN TWO YEARS, BOOSTING IMPORTS - REUTERS
Coal inventories at Indian power plants in the first half of October fell at their fastest rate in two years, an analysis of government data showed ...
Tuesday, 19 September 23
LNG SHIPPING STOCKS: THE ASIAN GROWTH UP-INDICES
Last week, the UP World LNG Shipping Index (UPI) gained 3.81 points or 2.51%, closing at 155.85 points. This index tracks the performance of LNG sh ...
Sunday, 10 September 23
GOLDMAN SACHS PREDICTS OIL PRICE TO HIT $100 ON OPEC CUTS - YAHOO FINANCE
Oil supply cuts by Saudi Arabia and Russia could lead to Brent crude jumping as high as $107 a barrel in 2024, Goldman Sachs Commodities Research h ...
|
|
|
Showing 81 to 85 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Indian Energy Exchange, India
|
| |
| |
|
