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.
|
|
Sunday, 26 February 23
MAWANI AND JEDDAH CHAMBER SIGN AN AGREEMENT TO BUILD INTEGRATED LOGISTICS PARK
Press Release: The Saudi Ports Authority (Mawani) and Jeddah Chamber of Commerce and Industry have today inked an agreement to set up an integrated ...
Saturday, 25 February 23
INDONESIA IS STILL BY FAR THE TOP SUPPLIER OF COAL TO CHINA - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels, said ban ...
Wednesday, 22 February 23
MARKET INSIGHT - INTERMODAL
The short-term outlook of the global soybean market is currently pivoted by a combination of weather patterns that are affecting the harvest progre ...
Saturday, 18 February 23
OIL UNLIKELY TO BREAK ABOVE $100/BBL THIS YEAR, J.P.MORGAN SAYS –- REUTERS
Brent oil prices are unlikely to breach the $100 a barrel level this year, barring any significant geopolitical drivers, with OPEC+ potentially add ...
Saturday, 18 February 23
CHINA'S COAL PRICES FALL TO 1 YR-LOW, CLOUDING DEMAND AND IMPORT OUTLOOK - REUTERS
China’s thermal coal prices hit their lowest levels in a year this week on rising inventories as domestic mine production is recovering faste ...
|
|
|
Showing 136 to 140 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Deloitte Consulting - India
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- The University of Queensland
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- PTC India Limited - India
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
|
| |
| |
|
