Coal producers demand revision of tax regulation

Coal mining companies have expressed their good intention to pay royalty from their coal production to the government but at the same time they demand the government to revise a controversial tax regulation, Kompas daily reported on Friday.

Jeffrey Mulyono, the chairman of the Association of the Indonesian Coal Mining Companies (APBI) said in a press statement that tax regulation No. 14/2000, which exempts coal sold in domestic market from value added tax (VAT), to be immediately revised.

Several major mining companies including Arutmin, Adaro, Berau Coal, KPC, Kideco and BHP Kendilo Coal have delayed the payment of the royalties from their coal production to the government since the issuance of the tax regulation. The unpaid royalties have since reached Rp 1.75 trillion.

Coal companies have been calling for the revision of the tax regulation for three years now. They said that since coal has been exempted from VAT, they could no longer offset a similar tax imposed on the import of capital goods for their coal production. This has caused a great burden for the companies.

Jeffrey said coal companies, which operate under the first generation contract of work, have the right to get the refund for the VAT payment.(*)