It has become a tradition when it started the era of a new regime, the rulers of this country often highlight state revenues from taxes. Understandably, a country’s income rests on tax collection in all sectors. So, it is very understandable if the pair of president and vice president Jokowi-JK also manipulate the tax revenue figure at the beginning of his administration.

One of the highlights is the mining tax. The reason is, the tax imposed on parties exploring natural resources is very significant in filling the state coffers.

The problem is, so far there are many mining entrepreneurs allegedly ‘taxing’ taxes. Deputy Chairman of the Corruption Eradication Commission (KPK) Bambang Widjojanto said that the management of the wealth of natural resources in Indonesia is not directly proportional to state tax revenues. Many taxes are allegedly lost due to acts of corruption in this sector.

Bambang quoted data on coal production that was out of sync between the Directorate General of Minerals and Coal at the Ministry of Energy and Mineral Resources and data at the Central Statistics Agency (BPS). According to Bambang, the production data of mineral and coal mining commodities in ESDM tend to be smaller than the data in BPS. From there alone it is to be expected, there has been a systematic ‘tax evasion’ effort for years.

The anti-mining mafia coalition has revealed government losses of up to Rp 4.6 trillion from the lack of fixed-fee payments and mining company royalties during 2010-2013. “This shows that the governance of the mining permit system is still weak in Indonesia,” said Indonesian Publish What You Pay (PWYP) Coordinator Maryati Abdullah, some time ago.

The calculation is based on data processed by PWYP. The loss came from the recapitulation of data from the Directorate General of Mineral and Coal in 12 provinces. It was found that the country’s potential loss from the underpayment of 4,631 IUP (Mining Business Permit) up to Rp 3,768 trillion.

In addition, the country’s potential loss from leasing land in 12 provinces resulted in a loss of Rp 919.18 billion. Of that number, three of them have a large potential loss, namely Kalimantan with Rp 754.94 billion, Sumatra with Rp 174.7 billion, Sulawesi, and Maluku with Rp 169.5 billion.

Maryati assessed that the Corruption Eradication Commission (KPK) initiative in coordinating and supervising minerals and coal in 12 provinces some time ago, proceeded slowly. He also urged President Joko Widodo to go down directly to the mining site.

The Head of the Regional Office of the Directorate General of Tax (DJP) of the Regional Office of East Kalimantan, Mohammad Isnaeni, also said that more than half of the entrepreneurs/taxpayers (WP) holders of mining business permits (IUP) were suspected of tax evasion. At present, there are 1,443 IUPs in East Kalimantan held by 1,297 entrepreneurs / WP. A total of 795 WP headquartered in East Kalimantan (Pph Agency). Even sadder, the number of taxpayers who pay tax and report their tax payments is only 363 WP or less than half, the rest is suspected of having lost tax.

He mentioned, in 2013 the tax revenue obtained reached Rp687 billion. After various quite intensive socialization and examinations, in coordination with the ranks of the Criminal Investigation Police and the Corruption Eradication Commission (KPK), in 2014 the amount of tax revenue increased to Rp786 billion.

The state has allowed taxpayers to make corrections and improvements so that tax payments are following the provisions. Well, if this is not done, then the company may act fraudulently by providing incorrect data. To companies like that, the regional and central government must have the courage to question legally.

According to Bambang Widjojanto, ten problems in the mining sector have the potential to harm the country including renegotiating 34 KK and 78 PKP2B contracts, increasing added value in the form of managing and refining mineral and coal mining products, structuring mining rights/mining business permits (IUP), as well as increasing obligations to meet domestic needs (Domestic Market Obligation), data and information systems, conducting supervision, and optimizing state revenue.

“Because of that, the KPK made efforts to prevent the occurrence of criminal acts of corruption by carrying out these activities in 12 provinces in Indonesia. This is to oversee the improvement of mineral and coal PNBP (Non-Tax State Revenue) management systems and policies, “said Bambang.

After all the KPK alone is not enough to prevent mining tax leaks. The trouble is, until now, there has not been a quick solution to overcome the chaotic mining tax problems. At the very least, in the long run, several things can be studied.

First, create disincentives for mining exports in raw form, thereby encouraging investment in mining processing industries such as coal gasification and tin ore processing.

Second, large mining companies are required to be listed on the stock exchange. At present, several large coal mines in Indonesia are still private companies, closed to public access. In theory, it would be easy to supervise mining companies, if the financial statements were published to the public.

Third, special administration for mining companies through KPP mining taxpayers, so it is more focused because it does not mix with other sectors.

Fourth, the Directorate General of Taxes opened cooperation with port authorities such as Pelindo and other ports, to find out cargo manifest data and pile stock of mining products.

Fifth, the government makes a standard for mining prices both coal and other minerals so as to facilitate measurement of compliance in tax reporting, such as the Indonesian Coal Index owned by government agencies. From this index, we can determine the income tax that must be paid and royalties that must be submitted by mining companies.

Sixth, restrictions on derivative contracts are excessive, because it is not logical for mining companies to pay fees in rupiah and sell in foreign currencies. Of course, this limitation is with disincentives such as taxation of hedging and swap contracts. thus the state is not disadvantaged. It is necessary to have a rule so that companies do not charge all foreign exchange losses because the payment of derivative contracts to counterparties will be taxed.

Difficult indeed. But this step must be taken to save the state budget and protect natural resources! | Author: Heru Pamuji (h.pamuji [at] | January 7, 2015