Indonesia to expand scope of exemptions from import duties for geothermal equipment
Karaha Bodas geothermal power plant, West Java, Indonesia (source: Gunawan Sutrisno)
Alexander Richter
5 Feb 2020
New regulation entering into force in Indonesia, that will give exemptions from import duty for geothermal operations to Joint Operational Contract Contractors (KKOB) and business entities.
In a report shared today, the Indonesian Ministry of Finance has rearranged the scope of parties who get exemption from import duties on imported goods for geothermal operations.
This expansion is outlined in Minister of Finance Regulation (PMK) No.218 / PMK.04 / 2019. Based on the regulation, exemption from import duty for geothermal operations can now be given to Joint Operational Contract Contractors (KKOB) and business entities.
“Exemption of import duty for geothermal operations … can be given to KKOB or business entities,” said the Article 3 paragraph (1) of the regulation.
The business entities granted exemption from import duties consist of holders of geothermal resource concessions, holders of geothermal exploitation permits, holders of geothermal permits, or performers of preliminary and exploration survey assignments (PSPE).
Based on the previous regulation, namely PMK No.177 / PMK.11 / 2007, the exemption was only given to business entities that obtained mining working areas (WKP) or received preliminary survey assignments or geothermal mining permits.
In addition, PMK No.177 / 2007 also provides exemptions for PT. Pertamina (Persero) and PT. Geo Dipa Energy. Exemption from import duty on the new regulation is also wider compared to other previous regulations, namely PMK No.78 / PMK.010 / 2005.
Referring to PMK No.78 / 2005, exemption from import duty is only given to KKOB. Through the new regulation, the Ministry of Finance also detailed the scope of geothermal operations that can obtain liberation, namely PSPE, exploration, exploitation and / or utilization.
Furthermore, the new regulation regulates the exemption of import duties as well as anti-dumping duties, fees, security measures, and / or retaliation. However, the exemption of import duties will only be granted if the import activity fulfills one of the three conditions.
First, the goods cannot be produced domestically. Second, the goods have been produced domestically but have not met the required specifications. Third, the goods have been produced domestically but the amount is not enough to meet the needs of the industry.
Then, PMK No.218 / 2019 explained that the imported goods could also obtain tax facilities. Such facilities are free of value added tax or sales tax on luxury goods; and / or are exempt from collection of income tax article 22.
The new regulation was promulgated on 31 December 2019 and 60 days after that. The enactment of this regulation will simultaneously revoke the previous regulation, namely PMK No.78 / 2005 and PMK 177 / PMK.011 / 2007.
Source: DDTC
