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Govt plans to increase coal royalty

The government plans to increase the royalty of coal produced by coal mining companies operating under IUP mining permits to 10 percent of net sales from a range of 3 percent and 7 percent at present, Kontan reported on Thursday.

The coal mining companies which operate under PKP2B contracts of works are exempt from the new royalty regulation.

According to the governments regulation Mo. 9/2012 on tariffs and non-tax revenues, the coal royalty is set at a range of 3 percent and 7 percent depending on the calorific value of the coal. The royalty is, for example, set at 3 percent for coal with calorific value of 5,100 kcal and 5 percent for coal with calorific value of between 5,100 and 6,100 kcal and 7 percent for coal with calorific value of more than 6,100 kcal.

The acting head of the fiscal policy agency, Bambang Brodjonegoro, said that the increase was needed because the present coal royalty was still too low. "We propose to increase coal royalty to 10 percent," he said.

Bambang said that the state revenues from coal and mineral royalties were projected to reach about Rp 20 trillion this year.

The proposal will be discussed with related officials at the energy and mineral resources ministry before being approved.
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