Indonesian Finance Minister Slams Tax Refund Policy for Coal Companies

Controversy Over Tax Refund Policy

Finance Minister Purbaya Yudhi Sadewa has strongly criticized the current tax refund policy for coal mining companies, stating that it results in significant losses for the state ¹

. The policy allows companies to claim back taxes they've already paid, including income tax and royalties, leading to negative government revenue.

Proposed Solution: Export Duty on Coal

To address this issue, Purbaya suggested implementing an export duty on coal, which is currently not levied. The proposed duty would be tiered based on coal prices, with rates ranging from 5% to 11% ²

. This move aims to ensure that the government receives fair revenue from the coal industry while balancing the interests of various stakeholders.

Rationale Behind the Policy Change

Purbaya emphasized that the management of natural resources should adhere to the principles outlined in Article 33 of the 1945 Indonesian Constitution, which mandates that natural resources be controlled by the state and utilized for the greatest prosperity of the people. He argued that the current tax refund policy contradicts this principle by essentially subsidizing wealthy coal companies ¹

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Stakeholder Reactions

While the proposal has faced protests from coal business operators, Purbaya remains confident that the new policy will ultimately benefit all parties involved. The revenue generated from the export duty will be used for development programs and public welfare initiatives, such as disaster relief and education ²

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