MoF won?t revise export tax policy

The Ministry of Finance (MoF) will not revise the current progressive export tax policy on mineral concentrates, despite protest from giant miners and suggestion from some senior government officials, report said on Monday.

Kontan daily quoted Vice Minister of Finance Bambang Brodjonegoro as saying that the export tax policy is crucial to help force miners to build the required domestic smelters.

The government introduced an export ban on mineral ores in January of this year in a bid to generate greater value added from mineral commodities by forcing miners to build domestic smelters as mandated by the 2009 Mining Law. However, the government still allows certain mineral concentrates which meet the minimum purity levels to be sold overseas until 2017, by which time the required domestic smelters have been constructed.

These concentrates are subject to a progressive export tax of 20-60 percent, which miners said are very punitive and would greatly undermine their profitability. Copper concentrate giants such as PT Freeport Indonesia and PT Newmont Nusa Tenggara have protested the export tax policy, and threatened to go to international arbitration to settle the tax dispute if the government insists on maintaining the policy.

Vice Minister of Energy and Mineral Resources Susilo Siswoutomo said recently that the government is considering to relax the export tax policy. (*)