Tax break for new mining contractors
Tax break for new mining contractors
JAKARTA (JP): The government will reduce income tax on new
mining contractors operating under sixth generation work
contracts to a maximum of 25 percent, lower than the current
highest rate of 30 percent.
"We hope the ruling on the tax incentive will be issued by the
finance ministry by end of this month," Director General of
General Mining Kuntoro Mangkusubroto said.
He told a gathering of the Indonesian Mining Society on Monday
evening that the tax incentive was needed to attract new mining
contractors.
Kuntoro said Indonesia was facing keen competition from other
countries such as the Philippines, China and Malaysia in
attracting foreign companies to tap its mineral resources.
"We also are mulling over extending outright the validity of
mining concessions from 30 years to 50 years," he said, but
declined to elaborate.
A mining concession is now valid for 30 years but can be
extended twice for 10 years each time, he said.
He noted that 74 foreign and domestic companies applied for
mining concessions in various provinces.
Kuntoro added that 53 of the applicants had obtained approval
in principle from his office while the other 21 were still in
various stages of evaluation.
He said the applicants included major foreign mining groups
such as Rio Tinto, BHP Minerals, Normandy, Normandy Anglo Asia
Group, Ocean Resources N.L. Group. Battle Mountain Group, Aurora
Group, Golden Group and Barric Group.
Kuntoro said that 60 of the applicants eyed mining concessions
in the eastern region and the other 14 companies in the western
provinces.
Royalties
According to Kuntoro, contractors operating under sixth
generation work contracts will also be required to pay royalties
to the government, the amount of which will depend on the
production capacity of each contractor.
Minister Mines and Energy I.B. Sudjana told the same gathering
that the formulations being finalized for sixth generation work
contracts would also become the basic guidelines for coal mining
contracts.
"In the future, coal mining contractors will deal directly
with the government and not with state-owned coal mining
companies as they do now," Sudjana said.
He also cited government efforts to expedite negotiations with
foreign mining contractors and to simplify licensing procedures
in the mining industry.
"Under simplified procedures, the processing of mining
contracts, from the filing of applications to the final signing,
will be completed within six months, compared to one year at
present," he said.
"The government wants to attract more foreign investors to the
mining sector," he said.(04/vin)