19-7-2023 (JAKARTA) Indonesia has introduced a new regulation that will see export tax rates for copper concentrate rise to a range of 5% to 10%. The government’s move is aimed at incentivizing mining companies to process metals within the country rather than exporting raw minerals.
This tax is part of Indonesia’s broader strategy to promote smelter construction and increase domestic processing of mineral resources, thereby maximizing the value derived from the country’s mineral wealth. In line with this objective, the government had previously imposed a ban on the export of raw minerals in June.
However, some exceptions were made for companies that had already made significant progress in constructing smelters. These companies, whose smelter completion rate is over 50%, were allowed to continue exporting mineral concentrates until mid-2024, on the condition that they pay the export taxes. Moreover, those companies with higher rates of smelter completion are subject to lower tax rates.
Under the newly implemented rules, copper miners with a completion rate of 50% or more, but less than 70%, will be subject to an export tax rate of 10%. For those with smelters that are 70% or more complete, but less than 90%, the tax rate will be 7.5%. Meanwhile, miners with smelters that are 90% or more complete will be subject to the lowest export tax rate of 5%. Prior to this regulation, the maximum export tax rate for copper miners stood at 5%.
The new tax rates also extend to iron, zinc, and lead concentrates. Similar to copper, the rates for these minerals will be based on the degree of smelter completion, ranging from 2.5% to 7.5%.
The new export tax rates came into effect on July 17 and will remain in place until December 2023. Additionally, they are set to increase once again in January 2024. From January 1, 2024, until May 31, 2024, the export tax rates for copper concentrate will rise to a range of 7.5% to 15%, depending on smelter completion. For iron, zinc, and lead concentrates, the rates will increase to between 5% and 10% during the same period.
