Government to remove value added tax on coal

The director general of taxation will soon remove value added tax (VAT) payment on coal following a widespread protest from the country's coal producers, Investor Daily reported on Monday.

Bambang Hartoyo, a senior executive at the directorate of minerals exploration at the Ministry of Energy and Mineral Resources, said in Jakarta on Saturday that the taxation office was currently revising regulation No 144 which includes coal in the group of products and services that are subject to VAT payment.

"If the regulation is revised, coal will be no longer part of commodities that are subject to valued added tax," he said.

The introduction of the regulation No. 144 in 2000 has incited a widespread protest from the country's coal producers, who argued that the commodity should not be subject to VAT payment, because coal, according to them, is not a type of commodities that generate an added value.

Many coal producers have cut their royalty payment to the government as part of their protest against the VAT regulation. (*)