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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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Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
...
Wednesday, 12 June 24
LNG NEWBUILDING VALUES AT RECORD HIGH: 78 NEWBUILD ORDERS PLACED IN 2024, DOUBLING 2023 - VESON NAUTICAL
The number of LNG newbuilding orders have more than doubled from the same period last year where 34 orders were placed, compared to 78 in the first ...
Monday, 10 June 24
CHINA'S MAY COAL IMPORTS RISE 11% ON LOWER DOMESTIC OUTPUT - REUTERS
China’s imports of coal rose 11% in May from a year earlier, customs data and Reuters records showed on Friday, as lower domestic output this ...
Tuesday, 04 June 24
HOW DO WESTERN SANCTIONS ON RUSSIA IMPACT THE GLOBAL METALS, MINING AND COAL MARKETS - WOOD MACKENZIE
The geopolitical landscape for Russia, as a major supplier of various commodities, has undergone a dramatic transformation since the invasion of Uk ...
Friday, 22 March 24
CASE STUDY: DANGERS OF COAL CARGO - SKULD
Recently, a bulk cargo vessel carrying coal from South Africa to Singapore suffered a fatal accident, resulting in the deaths of three crew members ...
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Showing 21 to 25 news of total 6871 |
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- Altura Mining Limited, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Australian Coal Association
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
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