Reuters: Regulatory News: UPDATE 1-Indonesia finmin sees mining export tax rule by June

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UPDATE 1-Indonesia finmin sees mining export tax rule by June Apr 13th 2012, 10:46 Fri Apr 13, 2012 6:46am EDT By Adriana Nina Kusuma and Neil Chatterjee JAKARTA, April 13 (Reuters) - Indonesia will issue a mining export tax regulation by June, the country's finance minister said on Friday, showing the government is pushing ahead with a policy that is worrying resource firms. Government officials in Indonesia, the world's top exporter of thermal coal and refined tin, have said a tax of 25 percent on mining exports is being considered for this year and a tax of 50 percent for 2013. "We want to be clear about which products and commodities will have the export tax imposed," Agus Martowardojo said, adding that government discussions were ongoing and more details would be released soon. The G20 member wants to develop its mining industry, create jobs and turn itself into a producer of higher-value finished goods from an exporter of raw materials as it seeks to become one of the world's ten biggest economies in the next decade. The tax proposal would add to a recent series of rules supporting a 2009 mining law aimed at increasing state revenue from a sector that contributes nearly 12 percent of GDP in Southeast Asia's top economy, at a time of high metal prices. Indonesia should quickly impose an export tax, the industry minister said on Thursday, though it is not clear that all key government departments involved agree on a measure analysts say could scare off new investment. "We are mulling over its merits," Gita Wirjawan, Indonesia's trade minister and investment chief, told Reuters, adding that he would discuss the measure with his industry and mining counterparts. Industry sources say companies holding long-standing Contract of Works such as top coal miner Bumi Resources are now meant to pay high corporate tax rates of around 45 percent and royalty charges of around 13 percent. However, firms say these contracts protect them from any new rule changes in the sector. Firms holding newer mining licenses pay lower tax rates and royalty charges of around 7 percent, but are at risk from rule changes. Indonesia's tax revenues are low by international standards, at around 12 percent of GDP. Other new regulations already issued by the government to increase mining revenue include a ban on unprocessed metals exports by 2014 and changes to rules on foreign mine ownership. Stringent regulations are likely to drive up the cost of mining in Indonesia but the outlook for the sector remains stable, ratings agency Standard & Poor's said on Thursday. "It will not harm the certainty of the business climate in the mining sector," Wirjawan, a former banker, said about the tax plan. Link this Share this Digg this Email Reprints

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