Govt sets resource rent taxes at six percent

Govt sets resource rent taxes at six percent

JAKARTA (JP): The government has introduced resource royalty
provisions, or rent taxes, on the country's timber companies to
replace mandatory forest royalties.

According to Government Regulation No. 59/1998, dated May 5,
forest concessionaires are liable for rent taxes, ranging from
zero to 6 percent of timber sales.

The regulation came into effect when it was issued.

"The resource royalty provision will be levied on the wood
standard selling prices, which will be determined by the Ministry
of Industry and Trade after taking into account wood prices in
the domestic and international market," the decree said.

Director of the Utilization and Distribution of Forest
Products Walter Nadapdap said "the wood standard selling prices"
would be determined by averaging prices in the world and domestic
markets.

He said the price of meranti (Shorea SP) wood in the
international market had reached US$125 per cubic meter, while in
the domestic market it was Rp 250,000 per cubic meter.

The decree stated that the rate of the resource royalty
provisions depended on the type of product and its origin.

Big diameter logs such as meranti and mixed jungle wood from
Sumatra, Kalimantan, Sulawesi, Maluku, Irian Jaya, East Nusa
Tenggara and East Timor attract a tax of 6 percent per cubic
meter of wood.

A 6-percent tax per meter cubic is also imposed on fancy
woods, such as teak, ebony, and sandalwood. And it is also
imposed on every ton of large diameter rattan such as pulut,
manau and tohiti, while a zero-percent tax will be charged on
small-diameter rattan such as sega.

The government imposes a 1 percent tax for every cubic meter
of wood with a diameter less than 30 centimeters.

The government charges a 5-percent tax on wood from industrial
forests, such as pine, acacia, balsa and sengon.

Of the resource rent tax revenues, 45 percent should go to the
local administrations, 40 percent for national forestry
development and 15 percent for local forest development.

Under the previous mandatory forest royalties, 45 percent of
the revenues were paid to local administrations for local forest
development, 20 percent as land tax, 15 percent to the Ministry
of Forestry's central office for national forest development and
20 percent to the state treasurer.

Walter said the government would likely review the so-called
standard selling prices at least every six months.

The government regulation also sets tariffs of several legal
forestry levies.

They include concession fees, entrance fees for forests,
national parks, forest reservations and marine national parks,
fees for catching and delivering wild animals and flora, and
fines on violating forest exploitation.

In addition to resource rent taxes and concession fees, timber
companies are still required to pay reforestation funds, to
encourage them to manage forests in an environmentally
sustainable manner. (gis)