{
    "success": true,
    "data": {
        "id": 1697857,
        "msgid": "indonesia-could-pocket-rp-67-trillion-annually-from-coal-cpo-windfall-tax-1777006415",
        "date": "2026-04-24 11:11:11",
        "title": "Indonesia Could Pocket Rp 67 Trillion Annually from Coal-CPO Windfall Tax",
        "author": "",
        "source": "CNBC",
        "tags": "",
        "topic": "Regulation",
        "summary": "The Institute for Development of Economics and Finance (INDEF) estimates that implementing a windfall tax on extractive sectors like coal and crude palm oil could generate an average of Rp 67 trillion per year for Indonesia from 2017 to 2024, peaking at Rp 192 trillion in 2022, equivalent to 0.98% of nominal GDP. This Progressive Resource Rent Tax (PRRT) would apply progressively to economic rents exceeding normal returns, acting countercyclically to stabilise fiscal revenues during commodity price fluctuations. INDEF recommends legislative and transitional measures to establish PRRT, including prospective application, data infrastructure, and alignment with downstream mineralisation policies, to optimise tax income without deterring investment.",
        "content": "<p>Indonesia has the potential to increase its average annual revenue by\nRp 67 trillion if it implements a windfall tax, or \u201cdurian runtuh\u201d tax.\nBased on a counterfactual simulation by the Institute for Development of\nEconomics and Finance (INDEF) covering all commodities from 2009 to\n2023, Indonesia could have obtained Rp 67 trillion from 2017 to 2024,\npeaking at Rp 192 trillion in 2022 (equivalent to 0.98% of nominal GDP\nin 2022), predominantly from coal commodities. In years of low prices\n(2015-2016, 2020) and the end of 2024, the simulated revenue approaches\nzero, consistent with the countercyclical design. These figures\nrepresent an upper-bound; gradual implementation would result in\nproportionally lower revenue trajectories in the early years. INDEF\nbelieves that applying PRRT (Progressive Resource Rent Tax) or windfall\ntax broadly to Indonesia\u2019s extractive sectors (oil and gas and minerals,\nwith parameter adaptations according to commodity characteristics) can\noptimise Indonesia\u2019s tax revenue during rising commodity prices while\nmaintaining deficits during falling prices. PRRT is a tax on economic\nrent imposed above the threshold of normal return levels, with\nprogressive tariff layers according to project profitability. \u201cThis\nproposal stems from the classic dilemma of resource-rich countries:\nabundant revenue when commodity prices rise, deficits when prices fall.\nPrice volatility is permanent and difficult to predict,\u201d writes INDEF in\na Policy Brief quoted on Friday (24\/4\/2025). \u201cCommodity windfalls will\ncontinue to recur. The question is not whether Indonesia is ready, but\nhow quickly its fiscal architecture can be repaired before the next\ncycle,\u201d adds INDEF. PRRT imposes additional progressive taxes on profits\nexceeding the normal rate of return from extractive projects. Every\nprofit exceeding capital costs and exploration risks constitutes\neconomic rent, which is a surplus arising from the scarcity of\nstate-owned resources, not from investor expertise or innovation.\n\u201cUnlike royalties imposed per unit of production without considering\nprofitability, PRRT is countercyclical. When prices are low and profit\nmargins per unit are thin, the PRRT burden approaches zero. When prices\nare high and profit margins per unit widen, tariffs increase gradually,\u201d\nwrites INDEF. INDEF Policy Recommendations INDEF\u2019s recommendations\ninclude substantive steps to build a PRRT regime and implementation\nchallenges that need to be managed in parallel, as follows: 1. Build the\nPRRT regime through legislation, and in the meantime, close windfall\ngaps through transitional regulations. Article 23A of the 1945\nConstitution requires that new taxes on resource rents can only be\nestablished through law; Government Regulations, Presidential\nRegulations, and Ministerial Regulations cannot create new tax\nobligations. Therefore, two parallel paths are needed. - Long-term\nlegislative path: The Ministry of Finance, Ministry of Energy and\nMineral Resources, and Bappenas prepare a PRRT Bill jointly with\nacademics and the DPR, either as a standalone law or amendments to the\nIncome Tax Law and Job Creation Law. - Transitional regulatory path for\n12-24 months (without new taxes): (i) Government Regulation\ncomplementing PP 18\/2025 and PP 19\/2025 that adds capacity utilisation\nand profit proxy as parameters for progressive royalty tariffs; (ii)\nPresidential Regulation for allocating progressive royalty revenues\nunder high-price conditions into a stabilisation reserve fund; (iii)\nMinisterial Regulations from the Ministry of Energy and Mineral\nResources and Ministry of Finance to strengthen production and cost\nreporting per contract. - Clear division of roles: Transitional\nregulations improve the structure of royalties on gross revenue and\nbridge the windfall capture gap, while the PRRT Law remains the sole\nconstitutional instrument for fully capturing economic rent. 2. Apply\nPRRT prospectively to maintain fiscal regime credibility and minimise\nincreases in the cost of capital in the extractive sector. Taxes on\nrents perceived as applicable retroactively can trigger\ntime-inconsistency problems (Daniel, Keen &amp; McPherson, 2010):\ninvestors raise risk premiums on new investments, project hurdle rates\nincrease, and exploration decisions are pressured. Compliance with the\nsanctity of contract is therefore an economic instrument to keep sector\ncapital costs low, not just a legal principle. - Binding new contracts\nafter the law takes effect. The PRRT regime is applied prospectively to\nprovide certainty of rules for future investments and prevent sunk-cost\nappropriation of already committed capital. - Grandfather clause for\nexisting contracts. Ongoing contracts are protected to keep expected\nreturns on committed capital intact; this is important because FDI\ninflows in the upstream sector are lumpy and path-dependent, so negative\nsignals from one regime will accumulate across investment cycles. -\nOpt-in voluntary benefit. Existing contractors can enter the PRRT regime\nvoluntarily with measured fiscal incentives, following Australia\u2019s\nprecedent during the transition from Crude Oil Excise to PRRT in the\n1990s, which successfully moved most contracts to the new regime without\ntriggering investment arbitration or upstream investment declines. 3.\nBuild integrated data infrastructure as the operational foundation of\nthe regime. Without credible production and cost data per contract,\nprofitability-based PRRT audits cannot be executed. - Integrated\ndatabase of SKK Migas, Directorate General of Minerals and Coal of the\nMinistry of Energy and Mineral Resources, and the Directorate General of\nTaxes with a 2-3 year development horizon. 4. Make transparency a core\nprinciple, not a supplementary feature. Transparency is a precondition\nfor regime credibility in the eyes of the public and investors. -\nElevate Indonesia\u2019s commitment in the Extractive Industries Transparency\nInitiative from the reporting stage to full implementation. -\nPeriodically publish all PRRT calculations and revenues per contract,\nincluding threshold parameters and captured rent. 5. Align PRRT with the\nmineral downstream agenda. PRRT targets rent from extraction, not value\nadded from processing;<\/p>",
        "url": "https:\/\/jawawa.id\/newsitem\/indonesia-could-pocket-rp-67-trillion-annually-from-coal-cpo-windfall-tax-1777006415",
        "image": ""
    },
    "sponsor": "Okusi Associates",
    "sponsor_url": "https:\/\/okusiassociates.com"
}