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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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Friday, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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Showing 41 to 45 news of total 6871 |
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- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- The University of Queensland
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