Supreme Court annuls coal export tax
Saturday, September 2 2006 - 01:01 AM WIB
ICMA chairman Jeffrey Muljono said the copy of the ruling, which was dated on August 22, 2006, was received on Friday.
ICMA filed judicial review on March 2006, contesting the controversial Ministry of Finance?s Decrees that imposed 5 percent tax on all coal exported from Indonesia.
In its ruling, Supreme Court opined that the imposition of such export tax was against the existing laws.
Jeffrey hoped that the ministry of finance could abide the ruling to annul coal export tax.
The Ministry of Finance issued a decree to impose a 5 percent tax on coal exports in October last year, arguing that the policy is necessary for the effort to curb coal exports and provide greater supply of coal to the local market.
The regulation does not affect the holders of the First Generation Coal Contract of Work (CCoW) who have fixed tax obligation under the contract.
A high-ranking official which was familiar with the matter said that the Court ruling would not cause automatic annulment of the decree. ?Judicial review is not legally binding as government has in its every right to ignore it. The result of the judicial review, however, could serve to speed up annulment of the coal export tax decree, as the government, internally, is evaluating whether or not to continue with the tax,? the official said.
The official said that opinion on coal export tax are divided in the cabinet, with Minister of Industry in favor of tax imposition on the ground of securing supply for domestic consumption and Minister of Eenergy and Mineral Resources voted against the imposition of such tax.
The imposition of the tax has somewhat reduce Indonesia?s competitiveness in export market, especially for the lower calorific value category, as coal exported was taxed on uniform rate, causing lower value coal exporters pay high tax on percentage basis. (alex/godang)