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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.
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Monday, 24 June 24
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Friday, 14 June 24
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Thursday, 13 June 24
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Showing 16 to 20 news of total 6871 |
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- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Australian Coal Association
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Eastern Energy - Thailand
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