Supreme Court annuls Govt Regulations on coal taxes

In a move that may give a boost to Indonesian coal mining industry, the Supreme Court had annulled two controversial government regulations that will ease the tax burden of coal producers.

The Supreme Court in its March 23 decision, ruled that Government Regulation 144/2000 (which stipulates coal is not subject to value added tax or VAT) and Government Regulation 65/2001 (which requires vehicles used solely for mining purposes to also pay similar taxes imposed on vehicles operating on public roads).

The Supreme Court opined that the two regulations are not in line with existing Laws, and therefore it must be annulled.

The Supreme Court issued the judicial review at the request of the Indonesian Coal Mining Association (ICMA).

Government Regulation 144/2000 had long been a headache for Indonesian coal producers since coal is exempted from VAT, which means that producers can not charge end users with the 10 percent VAT while at the same time they have to pay similar tax when purchasing production inputs and other equipments.

The regulation, said ICMA chairman Jeffrey Mulyono, has made coal producers less competitive.

However, it’s not clear, whether the judicial review could immediately take effect, as the Ministry of Finance and Directorate General of Taxation had not given their response on the matter yet. “ICMA had notified the Judicial Review to The Ministry of Finance and the tax office. I’m also informed that Ministry of Energy and Mineral Resources had contacted Ministry of Finance,” said ICMA Executive Director Bambang Susanto.

A legal expert contacted by Petromindo.Com opined that judicial review issued by The Supreme Court is final and can not be contested.(alex)