Experts recommend reimposition of VAT on coal

A group of experts from the Bandung Institute of Technology has recommended that the government reimpose value added tax (VAT) on coal produced by the first generation of coal producers, an official said Monday.

?A government team is studying the recommendation and will decide whether or not to accept it,? Luluk Sumiarso, secretary general of the Ministry of Energy and Mineral Resources, told reporters.

The director general of banks and non-bank financial institutions, Darmin Nasution, chairs the government team, while team members include Luluk, Geology and Mineral Resources Director General Simon Sembiring and a senior official of the Home Affairs Ministry.

Luluk did not say when the government would make decision on the VAT case. He only said that the House of Representatives commission in charge of energy and mineral resources had urged the government to make decision on that matter as soon as possible.

Coal producers had urged the government to revoke government regulation issued in 2000, or PP No. 144/2000, which exempts them from paying VAT. They even had planned to take their case to court if the government refused their request.

Six coal producers had reportedly 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 VAT. ?They will pay the royalty fund only if the government revokes PP No. 144/2000,? said Jeffrey Mulyono, chairman of Indonesian Coal Mining Association (APBI) without mentioning their names.

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.

The six coal producers had signed coal first generation coal contracts of work. (godang)