Supreme Court annuls regulations on coal tax<\/p>\n
Fitri Wulandari
\nThe Jakarta Post
\nJakarta<\/p>\n
The Supreme Court has nullified two government regulations on
\ntaxation in the coal mining sector, a move that may increase
\ninvestment in the sector.<\/p>\n
According to a press release issued by the Indonesian Coal
\nMining Association (ICMA) on Wednesday, the Supreme Court has
\nannulled Government Regulation No. 144\/2000 on value-added tax
\n(VAT) and Government Regulation No. 65\/2001 on vehicle tax
\nbecause they contradicted the law.<\/p>\n
Government Regulation No. 144 exempts coal from 10 percent
\nVAT. This has long been protested by coal producers as they have
\nto pay VAT when purchasing equipment and other items necessary
\nfor production, while they cannot pass this burden on to coal
\nbuyers as the commodity is exempted from the tax.<\/p>\n
The Supreme Court said the regulation was against Law No.
\n18\/2000 on VAT and luxury tax, which does not mention coal as
\ngoods exempted from VAT.<\/p>\n
VAT is levied on goods when there is added value in the
\nprocess of production.<\/p>\n
Meanwhile, Government Regulation No. 65\/2001 stipulates that
\nvehicles used in mining operations are subject to the same tax
\nimposed on vehicles operating on public roads.<\/p>\n
The Supreme Court opined that vehicles operated in remote
\nmining areas should not have vehicle tax imposed on them because
\nthey are not used on state highways.<\/p>\n
ICMA chairman Jeffrey Mulyono said the association welcomed
\nthe ruling by the Supreme Court and hoped the Ministry of Finance
\nwould amend the two regulations.<\/p>\n
He said many coal companies had been reluctant to expand their
\nmining business here partly because of the two controversial
\nregulations.<\/p>\n
Indonesia's coal production is expected to increase from 109.3
\ntons in 2003 to 119.7 million tons this year on the back of
\nstronger global and domestic demand. Indonesia's coal exports
\naccount for up 70 percent of production.<\/p>",
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