Coal giants oppose new tax system

The country?s major coal miners holding the first generation of coal contracts of work (PKP2B) have opposed a new tax system proposed by the government during the ongoing mining contract amendment negotiation.

Director General of Mineral and Coal Bambang Gatot Ariyono said on Thursday that the tax issue has been the major stumbling block for the first generation PKP2B miners, which account for about 70 percent of the country?s coal production, in agreeing to amend their mining contracts to comply with the terms set in the 2009 Mining Law.

The government currently applies so-called nailed down tax system, which means that the miners pay fixed tax until their contracts expire.

But under the mining contract amendment, the government proposes a new prevailing tax system, which will force miners to follow prevailing tax rulings until their contracts expire.

Bambang said that the miners see this new proposed tax system to create difficulties for them in determining investment return as the taxes can change overtime. ?We?ll have to discuss this over with the ministry of finance,? he said.(*)