Coal association want re-imposition of VAT on coal sales

The Association of Indonesian Coal Miners (APBI) has asked the House of Representatives to re-impose value added taxes (VAT) on coal sales in the bill on VAT and Sales Tax on Luxury Goods currently being debated at the House, Kontan reported Wednesday

Speaking during a hearing with the House?s task force for the deliberation of the draft law, the association?s chairman Jeffrey Mulyono said that the re-imposition of the VAT on the sales of coal would prevent coal miners from paying double taxes.

?If the VAT is re-imposed, the coal miners will be able to reclaim the VAT they have already paid,? he said, adding that until VAT on coal sales was scrapped several years ago, coal miners could regain the input VAT (the VAT paid by the miners for goods and services used in their production activities) by collecting output VAT (the VAT charged on coal buyers).

He said the government also supported the association proposal as it will be able to end years of tax disputes involving coal miners and tax offices.

Last month, the government imposed a travel ban on 14 executives of the country?s six coal firms on charges of withholding the firms' royalty payments to the government.

The six companies were accused of witholding royalties payment of about Rp 3.36 trillion over the period of 2001 and 2006. The firms said they withheld the royalties in compensation for the government?s refusal to refund their VAT payment during the same period.

Under the First Generation PKP2B contracts held by the firms, they are exempted from the VAT.

The royalty and tax dispute began in 2001 following the issuance of a new tax regulation which exempted coal from VAT payment. Consequently, the coal miners could no longer able to recoup the VAT they had paid for the purchases of materials including mining equipment.(*)