Govt to introduce resource rent tax

Govt to introduce resource rent tax

JAKARTA (JP): The Ministry of Forestry and Plantations will
change forestry royalties imposed on timber companies to a
resource rent tax, as required by the International Monetary Fund
(IMF).

Director General of Forest Utilization Titus Sarijanto said
last week that the government would make the changes when log and
plywood prices improved on the international market.

"We may abolish forest royalties when we introduce the
resource rent tax," Titus said.

"It would be unreasonable to ask concessionaires to set aside
part of their profits to pay both royalties and resource rent
tax, especially when log and plywood prices are declining," he
added.

He said the ministry was currently discussing the
implementation of the resource rent tax with the Ministry of
Industry and Trade.

However, he declined to say what rate the new tax would be set
at. "We will review the ability of forest concessionaires to
pay", he said.

Forest royalties currently make up about 6 percent of the
price of forest products.

From total forest royalties paid, 45 percent is allocated to
provincial administrations for local forest development, 20
percent goes to local administrations as land tax, 15 percent is
retained by the central Ministry of Forestry office for national
forest development and 20 percent goes to the state treasury.

Forest royalties are among a number of fees forest
concessionaires have to pay.

Under the agreement between the government and the IMF, the
government is required to replace certain export taxes with
resource rent taxes to protect the environment and eliminate the
bias against production for export rather than for domestic use.

The government reduced export taxes on logs, sawn timber and
rattan to a maximum of 10 percent on March 1. (gis)