Govt to remove lex specialist facility in mining sector

The government has decided to remove the special treatment policy (lex specialist) in mining sector, the Bisnis Indonesia and Kompas newspapers reported on Tuesday.

The decision to remove lex specialist policy is in line with the new taxation law, director general of geology and mineral resources Wimpy S. Tjetjep said.

?The total amount of tax (under lex specialist policy) in the mining sector is always unchanged from the beginning of a mining contract to the end of the contract. This system cannot be continued anymore. Mining operators must follow the tax (new) laws,? Wimpy told Bisnis in Jakarta.

Despite mining investors' demand that the government keep the lex specialist policy in place, the government?s policy now is that it should be withdrawn immediately in line with the existing taxation law, Wimpy told Kompas newspaper in Jakarta on Monday.

As a compensation, the government will give some other tax benefits to foreign investors in order to attract foreign investment in the mining sector, he said.

Separately, chairman of the Indonesian Mining Association (IMA) Benny Wahju said he still expected the government to retain the lex specialist policy in the mining sector.

?If the policy is removed, there is no legal certainty for mining activities and it (mining) is highly risky for investment. The mining sector needs long term investment and therefore the legal certainty must be clear,? said Benny.

By removing lex specialist policy, the Indonesian mining sector will not be attractive to foreign investors, Benny warned. (*)