Coal producers withhold Rp2 trillion in government royalty

Six coal producers in Indonesia have not paid a combined Rp2 trillion (US$=Rp8,250) in royalty to the government since 2001 to protest the government decision of exempting them from value added tax (VAT), Bisnis Indonesia daily reported Tuesday.

They will pay the royalty fund only if the government revokes the regulation it issued in 2000, PP No. 144/2000, which exempts coal producers from paying VAT, the paper quoted as saying Jeffry Mulyono, chairman of Indonesian Coal Mining Association (APBI).

Before the issuing of the government regulation, the inclusion of VAT in coal prices for the domestic market enabled coal producers to offset similar taxes imposed on their imported capital goods.

Jeffry said the six coal producers had signed coal first generation coal contracts of work. He did not mention their names.

Jeffry said Tuesday APBI had failed to persuade the government to annul the regulation. The association even had planned to sue the government in court.

The regulation, however, imposes VAT on coal briquette. (*)