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, 23 May 23
INDIA: COAL OUTPUT UP 8.9%, SUPPLY RISES 11.7% IN APRIL - FINANCIAL EXPRESS
India’s coal production jumped 8.85% to 73.14 million tonne (MT) in April 2023 and the total coal despatch during the month went up 11.66% to ...
Tuesday, 23 May 23
CHINA COAL OUTPUT UP 4.5 PCT IN APRIL - XINHUA
China’s raw coal output posted stable expansion in April, official data showed.
The country produced 380 million tonnes of raw ...
Saturday, 20 May 23
NON-OPEC OIL SUPPLY DEVELOPMENT - OPEC
In 2022, non-OPEC supply is estimated to have increased by 1.9 mb/d y-o-y. Out of this, US liquids production increased by 1.2 mb/d, mainly on the ...
Saturday, 20 May 23
GLOBAL COAL TRADE HAS REALLY PICKED UP PACE IN RECENT MONTHS, NOW FULLY BACK TO PRE-COVID LEVELS - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels. In Jan-Apr 2023, total global seaborne coa ...
Saturday, 20 May 23
MARKET INSIGHT - INTERMODAL
India is one of the world's largest coal producers and one of the world's largest importers of coal. The country uses coal mainly for power ...
|
|
|
Showing 101 to 105 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- GVK Power & Infra Limited - India
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
|
| |
| |
|
