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Wednesday, 23 September 15
INDONESIA: NEW REGULATION APPLIES FINAL INCOME TAX TO MINERAL AND COAL SALES - FLORENCE GRACIA SANTOSO
 To increase state revenue from the mining sector, the Government of Indonesia has imposed a new final income tax on any sale of mineral and coal, adding to the burden on the Indonesian mining industry. The new income tax, i.e. Article 22 Income Tax, is regulated under Minister of Finance ("MOF") Regulation No. 107/PMK.010/2015 regarding the Collection of Withholding Tax in Connection with Payment for Delivery of Goods and Imports or Other Business Activities. The regulation came into force 60 days after its issuance on June 8, 2015. This new regulation is the fourth amendment of MOF Regulation No. 154/PMK.03/2010 regarding Article 22 Income Tax.
Article 22 Income Tax, at the rate of 1.5%, now applies to any sale, either domestic or export, of non-processed or non-refined minerals (metal, non-metal and stone) and coal. Exporters must pay the income tax to the state treasury through a post office, foreign exchange bank or any bank appointed by the MOF. Evidence of payment will be verified by the Directorate General of Customs and Excise as a required supporting document for the export notification and will be used as a basis to issue an export clearance.
This income tax is only applicable to holders of a mining business license (Izin Usaha Pertambangan). It does not apply to holders of a Contract of Work (Kontrak Karya) or Coal Contract of Work (Perjanjian Kerjasama Pengusahaan Pertambangan Batubara), who are subject to different financial obligations under their respective contracts.
Since it is a final income tax, this tax will be imposed on the gross income of the company without deducting any expenses incurred to produce, collect or maintain such income. This means that the company must pay the income tax even if the company is not profitable, since this tax is payable upon any sale of minerals and coal.
Income that is subject to final income tax cannot be combined with other income (which is subject to non-final income tax) in the calculation of income tax as reflected in a company’s annual tax return. Final income tax paid under this rule cannot be deducted against non-final income tax.
In an attempt to promote domestic processing and refinery activities, this income tax will not apply to any refined minerals or processed coal. Only minerals in the form of ore or concentrate and non-agglomerated coal are subject to the 1.5% income tax. Under current rules, only a few minerals (copper, iron, manganese, lead and zinc) are allowed to be exported not in refined form (only processed to a certain level). Other minerals cannot be exported unless refined as required under Minister of Energy and Mineral Resources ("MEMR") Regulation No. 1 of 2014 as amended by MEMR Regulation No. 8 of 2015.
The Government of Indonesia has made efforts to reduce the export of unrefined minerals by imposing complicated, lengthy and expensive procedures for such exports. Mineral exporters must first register with the Ministry of Trade to obtain a Registered Exporter Certificate for the Export of Mining Products (Eksportir Terdaftar Produk Pertambangan). This certificate is valid for three years but may be extended an unspecified number of times. To obtain the certificate, the exporter must obtain an approval from the Directorate General of Mineral and Coal ("DGMC").
Another approval from the DGMC is required for the export of unrefined (processed) minerals. This approval is only valid for six months and may be extended. Before any mining products are exported they must first be verified and approved by a Ministry of Trade-registered surveyor to ensure they have been processed/refined to the required standard.
In addition, the export of unrefined (processed) minerals is subject to a very high export tax rate. The export tax rate in 2015 has ranged from 30% to 40% which is scheduled to increase to 50% to 60% as of January 1, 2016 until January 12, 2017. As of January 12, 2017, under current rules, only refined minerals can be exported.
By Florence Gracia Santoso
SSEK Indonesian Legal Consultants
 About Florence Gracia Santoso
Florence is experienced in energy, infrastructure, investment and mergers and acquisitions, and has been involved in a number of acquisitions involving industrial and trading companies. Since joining SSEK Legal Consultants in 2010, Florence Gracia Santoso has been involved in numerous major mining transactions.
This article is intended for informational purposes only and does not constitute legal advice. This article should not be acted upon in any specific situation without appropriate legal advice.
If you believe an article violates your rights or the rights of others, please contact us.
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Thursday, 01 October 15
SOUTH KOREA'S KOMIPO SEEKS SPOT BITUMINOUS COAL SUPPLIES
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 265,000 Metric Tons (MT) of minimum 4,600 kcal ...
Wednesday, 30 September 15
Q1'16 FOB INDONESIA COAL SWAP FALLS $1.25 A TON AS SLIDE CONTINUES
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 0.72 (-1.78%) per t ...
Wednesday, 30 September 15
NEW BUILDING MARKET INSIGHT
COALspot.com: This year has been, beyond any doubt, a rather strenuous one for the newbuilding market. Ordering activity with regards to Dry Bulker ...
Tuesday, 29 September 15
FOB RICHARDS BAY COAL SWAPS ARE SLIDING
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Monday, 28 September 15
API 5 FOB NEWCASTLE COAL SWAPS UP $2.15 IN ONE MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery increased $2.10 per ton (5.15%) month over month to US$ 42.93 per ton. The ...
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- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Planning Commission, India
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
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