Indonesia considers 25pc tax on coal exports

Indonesia considers 25pc tax on coal exports
04 Apr 2012 04:30 GMT
Singapore, 4 April (Argus) — Indonesia may impose a 25pc export tax on coal in the near future in a bid to ensure sufficient supplies for domestic consumption.

Indonesia’s finance ministry is carrying out a detailed feasibility study to decide on the exact tax rate as well as when and for how long it will be implemented, a senior official at the Indonesia Mining Association said.

A 25pc rate is under discussion, but this could change depending on market reaction. Indonesia does not currently tax exports of coal.

But the tax will be controversial and may be challenged by suppliers looking to receive compensation, potentially delaying its implementation.

“It is difficult for the government to impose the tax without tradeoffs such as lowering the corporate tax from 45pc to 25pc or royalties from 15.5pc to 7pc,” the official said.

The Indonesian government is taking an increasingly hands-on approach to coal regulation, last month announcing a new law requiring foreign investors to sell a majority stake in coal mines after 10 years of production.

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