Mining 2026

INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Mahatma Hadhi, Kenny Poltak and Atika Rizka, ABNR Counsellors at Law

Dead rent is calculated per hectare per year based on the concession size and stage of operation, while royalties are calculated based on percentage of sale value based on commodity type, grade and bench - mark price. Rates apply equally to domestic and for - eign-owned companies operating under Indonesian mining licences. 4.2 Tax Incentives for Mining Investors and Projects Below are two tax incentives for mining investors and projects applicable in Indonesia. Tax Holiday Tax Holiday refers to tax facilities granted to domestic corporate taxpayers in the form of reduction of Cor - porate Income Tax (CIT) from new investments of at least IDR100 billion in pioneer industries for a cer - tain amount of years. The reduction ranges from 50% of payable CIT for new investments with investment value ranging from IDR100 billion to IDR500 billion to 100% of payable CIT for new investments with invest - ment value of at least IDR500 billion. In the mining sector, the Tax Holiday is available for the integrated upstream basic metal industry. Tax Allowance Tax Allowance refers to the tax facilities granted to domestic corporate taxpayers for their new invest - ment or expansion of existing investment in certain business fields or in certain regions with a specific Indonesian Standard Classification of Business Field ( Klasifikasi Baku Lapangan Usaha Indonesia or “KBLI”). The business fields and regions listed as such are considered national high priorities by the Indone - sian government. The tax facilities that may be given under the Tax Allowance scheme are as follows: • a reduction in net income of up to 30% of the total investment value in the form of tangible fixed assets including land, which are used for the Main Business Activity, prorated at 5% for six years of the commercial production, provided that the assets invested are not transferred out within those six years;

• accelerated depreciation of tangible fixed assets and accelerated amortisation of intangible assets acquired in the framework of investment, with a shelf life, depreciation rate and amortisation rate determined in detail under Government Regulation No. 78 of 2019 on Income Tax Facilities for Invest - ment in Specific Business Fields and/or in Specific Regions; • a reduction of the withholding tax rate on dividends paid to non-residents (foreign taxpayers other than permanent establishments in Indonesia) to 10% (or lower based on the applicable double taxation avoidance agreement); and • compensation for tax losses that are incurred for longer than five years but not more than ten years. The Tax Allowance is available for processing and refining activities of certain mining commodities, including base iron, nickel, copper, gold and many others. Under Indonesia’s current mining regulatory frame - work, tax stabilisation agreements are no longer avail - able. Indonesia previously provided a form of fiscal stability through the Contract of Work and Coal Con - tract of Work regimes, where it was possible to have key fiscal terms – such as taxes, royalties and duties – fixed for the duration of the contract. However, with the transition to the IUP/IUPK licensing regime, this contractual approach has largely been replaced. Under the current framework, mining licence holders are generally subject to the prevailing laws and regulations. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects Under Indonesian tax regulations, withholding tax applies to any transfer of shares in Indonesian com - panies, including mining companies. The rules do not provide a specific distinction for mining companies; rather, the tax treatment follows the general provisions applicable to share transfers. When the transfer occurs through an offshore cor - porate structure, such transaction may still trigger Indonesian tax obligations depending on whether the transfer results in a change of share ownership of an

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