Indonesia Mining Industry Fiscal Regime Analysis – Governing Bodies, Regulations, Licensing Fees, Taxes, Royalties, 2023 Update
All the vital news, analysis, and commentary curated by our industry experts.
Indonesia Mining Industry Report Overview
Indonesia has abundant minerals. The minerals include coal, gold, bauxite, copper, and nickel, alongside the potential to produce alluvial diamonds. It plays a crucial role in the global coal markets and is among the largest suppliers of coal to Asian markets such as India, China, South Korea, Japan, and Taiwan. The country’s mining industry is a key contributor to the nation’s economic growth.
The Indonesia mining industry report provides comprehensive coverage of Indonesia’s mining fiscal regime. The report focuses on the mining fiscals’ key aspects such as governing bodies, laws and regulations, governance frameworks, and sustainability practices. The report also includes mining-related taxes and royalties.
|• Ministry of Energy and Mineral Resources (MEMR)
• Ministry of Environment and Forestry
• The Association of Exploration and Mining Development Indonesia
• Indonesian Coal Mining Association
|• Law on Mineral and Coal Mining No. 3 of 2020
|Taxes and Royalties
|• Law of Tax Regulation Harmonization
• Corporate Income Tax (CIT)
• Carbon Tax
• Mining Tax
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Indonesia Mining Industry - Governing Bodies
The key governing bodies in the Indonesian mining industry are the Ministry of Energy and Mineral Resources (MEMR), the Ministry of Environment and Forestry, The Association of Exploration and Mining Development Indonesia, and the Indonesian Coal Mining Association.
Ministry of Energy and Mineral Resources (MEMR): It endeavors to improve energy and mineral operations, making them more efficient, sustainable, and environmentally friendly. The agency deals with the formulation and implementation of policies related to coal and minerals, energy conservation, and geology.
Governing Bodies in Indonesia’s Mining Industry
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Indonesia Mining Industry – Mining Laws
The main law governing the mining industry of Indonesia is Law on Mineral and Coal Mining No. 3 of 2020. On 10 June 2020, the President of Indonesia signed a bill to amend Law on Mineral and Coal Mining No. 4 of 2009, which has now been sanctioned into Law No. 3 of 2020 (2020 Mining Law). The new law aims at developing the country’s downstream mining industry and encourages investments in mining exploration.
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Indonesia Mining Industry – Taxes and Royalties
The main taxes applicable in the Indonesian mining industry are the Law of Tax Regulation Harmonization, Corporate Income Tax (CIT), Carbon Tax, and Mining Tax.
Law of Tax Regulation Harmonization: On 7 October 2021, the Indonesian Government passed the Tax Regulations Harmonization Law (HPP Law), which became Law No 7/ 2021 on 29 October 2021. The rules go into effect on different dates, such as for income tax purposes in the 2022 Fiscal Year and for VAT purposes on 1 April 2022. The HPP Act is a component of tax reform aimed at accelerating national growth and economic recovery.
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- On May 5th, 2023, the Indonesian government released Regulation No. 25 of 2023 on Mining Areas (GR 25/2023), establishing a new legal framework for the identification and designation of mining areas. The key mining areas include Wilayah Usaha Pertambangan (WUP) – Mining Business Area and Wilayah Pertambangan Rakyat (WPR) – People’s Mining Area among others.
The report focuses on the mining fiscals’ key aspects such as governing bodies, laws and regulations, governance frameworks, and sustainability practices. The report also includes mining-related taxes and royalties.
Reasons to Buy
- To help businesses navigate the complexities and comply with the necessary requirements.
- Obtain up-to-date information on mining sector taxes and payments.
- Enhance your decision-making capability in a more rapid and time-sensitive manner.
- Conduct analysis to mitigate the impact of regulatory changes.
- Understand the regulatory framework.
- Gain an overview of the mining industry structure by identifying the country’s mining governing bodies, major laws, and licenses.
Table of Contents
Law and Regulations
Rights and Obligations
Mineral Licenses and Mining Areas
Taxes and Royalties
Sustainable Mining Practices
Table 1: Mining Governing Bodies and Agencies, 2022
Table 2: Mineral License, 2022
Table 3: Mining Areas, 2022
Table 4: Corporate Income Tax, 2022
Table 5: Fixed Fees by Mining License, 2022
Table 6: Royalty Rates by Selected Commodities, 2022
Table 7: Royalty rate revision for IUPK, 2022
Table 8: Royalty rate revision for IUP, 2022
Table 9: Depreciation Rates (%), 2022
Table 10: Withholding Tax Rate (%), 2022
Figure 1: Country overview, 2022
Figure 2: Nominal GDP ($ Billion) and Real GDP growth rate (%), 2001–21
Figure 3: Mining FDI and exports, 2017–21
Figure 4: Corruption perception index rank, 2015–21
Figure 5: CPI Ranking, 2021
Figure 6: Mineral’s production trend, 2011–2021
Frequently asked questions
What are the key governing bodies in Indonesia mining industry?
The key governing bodies in Indonesia mining industry are the Ministry of Energy and Mineral Resources (MEMR), the Ministry of Environment and Forestry, The Association of Exploration and Mining Development Indonesia, and Indonesian Coal Mining Association.
What is the main law governing the mining industry of Indonesia?
The main law governing the mining industry of Indonesia is Law on Mineral and Coal Mining No. 3 of 2020. The new law aims at developing the country’s downstream mining industry and encourages investments in mining exploration.
Which are the key taxes applicable in the Indonesia mining market?
The main taxes applicable in the Indonesia mining industry are the Law of Tax Regulation Harmonization, Corporate Income Tax (CIT), Carbon Tax, and Mining Tax.
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