{
    "success": true,
    "data": {
        "id": 1684655,
        "msgid": "has-indonesia-already-implemented-the-windfall-tax-heres-the-fact-1776437461",
        "date": "2026-04-17 20:50:35",
        "title": "Has Indonesia Already Implemented the 'Windfall' Tax? Here's the Fact",
        "author": "",
        "source": "CNBC",
        "tags": "",
        "topic": "Mining",
        "summary": "The Institute for Development of Economics and Finance (INDEF) proposes the adoption of a Progressive Resource Rent Tax (PRRT) for Indonesia's extractive sectors, including oil, gas, and minerals, to better capture windfall profits from commodity price surges. While Indonesia has introduced progressive royalty rates for coal and nickel under recent government regulations, INDEF notes these are based on gross revenue rather than actual profits, falling short of a true windfall tax like PRRT which applies progressive rates only above a normal rate of return. This recommendation addresses the classic resource-rich nation dilemma of volatile revenues, aiming for a more countercyclical fiscal tool that minimises production distortions during low-price periods.",
        "content": "<p>The Institute for Development of Economics and Finance (INDEF)\nproposes the implementation of PRRT (Progressive Resource Rent Tax)\nacross Indonesia\u2019s extractive sectors (oil and gas and minerals and\ncoal), with parameter adaptations suited to commodity characteristics.\nPRRT is a tax on economic rent (windfall tax) or \u2018sudden fortune\u2019 tax\nlevied above the threshold of normal rate of return, with progressive\nrate layers according to project profitability. \u201cThis proposal stems\nfrom the classic dilemma of resource-rich countries: abundant revenues\nwhen commodity prices rise, deficits when prices fall. Price volatility\nis permanent and difficult to predict,\u201d quoting INDEF\u2019s Policy Brief on\nFriday (17\/4\/2026). PRRT imposes additional progressive taxes on profits\nexceeding the normal rate of return from extractive projects. Any profit\nexceeding capital costs and exploration risks constitutes economic rent,\na surplus arising from the scarcity of state-owned resources, not from\ninvestor expertise or innovation. \u201cUnlike royalties levied per unit of\nproduction without considering profitability, PRRT is countercyclical.\nWhen prices are low and per-unit profit margins are thin, the PRRT\nburden approaches zero. When prices are high and per-unit profit margins\nwiden, rates increase gradually,\u201d writes INDEF. Has Indonesia already\nimplemented PRRT? INDEF notes that Indonesia has a framework for\nprogressive royalties, although not a true windfall tax. PP 18\/2025\napplies progressive coal royalty rates based on Reference Coal Price\n(HBA), calorific value, and mining method, ranging from 6-13.5 percent\nfor open pit and 5-12.5 percent for underground mining. PP 19\/2025\nreplaces the flat 10 percent royalty for nickel ore with a progressive\n14-19 percent based on Reference Mineral Price (HMA), with a special 2\npercent rate for low-grade ore to support the domestic electric vehicle\nindustry. INDEF states that both regulations remain based on gross\nrevenue (price times volume), not profit. Meanwhile, PRRT differs\nfundamentally because it is levied on economic rent, namely profit above\nthe normal rate of return. \u201cOptimal taxation theory indicates that\nprofit-based instruments are superior: tax burden rises with margins, so\nproduction incentives are not distorted when prices fall, unlike\nroyalties that can force companies to cut production or close mines when\nmargins are thin (Boadway &amp; Keen, 2010),\u201d writes INDEF. The PRRT\nbasis is not accounting margin like Net Profit Margin, but profit\nexceeding the assumed normal rate of return on assets. \u201cPP 18\/2025 and\nPP 19\/2025 do not incorporate national production capacity utilisation\nas a rate parameter. However, findings of asymmetry in elasticity in the\nfollowing section show that aggregate capacity becomes a limiting factor\nwhen prices are high. The current progressive royalty framework has not\nyet addressed the root of the windfall capture gap.\u201d<\/p>",
        "url": "https:\/\/jawawa.id\/newsitem\/has-indonesia-already-implemented-the-windfall-tax-heres-the-fact-1776437461",
        "image": ""
    },
    "sponsor": "Okusi Associates",
    "sponsor_url": "https:\/\/okusiassociates.com"
}