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)