Article / 02 Dec 2022 /Risandy Meda Nurjanah

Four New Parties Received Import Duty dan Tax Exemption for Geothermal Operation

Four New Parties Received Import Duty dan Tax Exemption for Geothermal Operation
In order to accommodate the policies of geothermal sector infrastructure financing funds, government amended several provisions in import duty and/or tax exemption rules regarding geothermal activities imports. This is governed by Minister of Finance Regulation Number 172/PMK.04/2022, which came into effect on December 23, 2022.

Import duty exemption, VAT or Sales Tax on Luxury Goods collection exemption and/or exceptions of income Tax Article 22 is still given on imports of goods used for geothermal operations. These facilities are provided for goods that cannot be produced domestically, have been produced domestically but do not meet specifications or are not sufficient for industry needs. In addition, the aforementioned implementation is an indirect utilization of the following conditions, namely:
  1. Preliminary survey or preliminary survey & exploration;
  2. Exploration;
  3. Exploitation; and/or
  4. Utilization.
Government amended several regulations in Minister of Finance Regulation Number 128/PMK.04/2018 through Minister of Finance Regulation Number 172/PMK.04/2022. One of the interesting new provisions is the four additional parties who received import duty, VAT, Sales Tax on Luxury Goods, and Income Tax Article 22 on import facilities. The four parties are ministries/agencies, regional governments, universities and research institutes.

As a result, all parties who receive import duty exemption and/or exceptions of income Tax Article 22 on imports of geothermal goods facilities are:
  1. Joint Operation Contract Contractors (“Kontraktor Kontrak Operasi Bersama” or KKOB), namely contractors who sign joint operation contracts with PT Pertamina (Persero);
  2. Business Entities operating in geothermal sector, in the form of State-Owned Enterprises, Regional-Owned Enterprises, Cooperatives or limited liability companies domiciled in Indonesia;
  3. Power  holders of attorney/permit to exploit geothermal resources, holders of geothermal permits, executors of Preliminary Survey and Exploration (“Penugasan Survei Pendahuluan dan Eksplorasi” or PSPE) assignments or recipients of exploration support assignments;
  4. Ministries/Institutions engaged in geothermal activities;
  5. Regional Government, namely governors, regents, mayors and regional apparatus as elements of regional government administration;
  6. Universities; or
  7. Research institute that organizes research and development, one of which is geothermal field.
 
Procedures for Submitting Exemption from Import Duties and Taxes Applications

In order to obtain import duty exemption and/or exception of income Tax Article 22 on import of geothermal goods facilities, all parties must submit an application to the Minister through Head of Regional Office or Head of Main Service Office supervising geothermal work area.

In addition, applications are submitted electronically through Indonesia National Single Window (NSW) system. The following documents must be submitted with the application:

ApplicantAttachment Document
Joint Operation Contract Contractor (KKOB) or Business Entity
  • Taxpayer Identification Number (soft-file scan-copy)
  • Joint operating contract or power of attorney for geothermal resources, permit for exploitation of geothermal resources, geothermal permit, or letter of assignment from Minister administering government affairs in geothermal sector, or letter of assignment for exploration support from Minister administering government affairs in the geothermal sector (soft-file scan-copy);
  • Goods Import Plan (original document).
Ministries/agencies or local government
  • A copy of budget implementation checklist or similar documents and/or a statement stating that financing in the budget implementation checklist or similar documents for goods requested for exemption from import duties, does not include elements of import duties and/or taxes (soft-file scan-copy);
  • A copy of goods procurement agreement or contract with vendor stating that price in goods procurement agreement or contract does not include payment of import duties and/or taxes, in terms of goods procurement using vendors. (soft-file scan-copy);
  • Goods Import Plan (original document).
College or research institute
  • Assignment decree from Minister administering government affairs in geothermal sector (soft file scan-copy);
  • Goods Import Plan (original document).

If INSW system is unavailable, application can be submitted electronically through Directorate General of Customs and Excise Portal by attaching sample or specimen signature of the head/manager or KKOB officials, business entities, ministries/agencies, local governments, universities, or research institutes authorized to sign Goods Import Plans.

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