The government has issued the latest provisions on the stipulation of the price of steam and electricity in stipulating the tax base (Nilai Jual Objek Pajak/NJOP) of the land and building tax (Pajak Bumi dan Bangunan/PBB) in the mining sector, specifically for geothermal exploitation of body of earth for exploration.
These provisions are outlined in the Director General of Taxes Decree No. KEP-46/PJ/2021 concerning Pricing of Steam and Electricity Used in Stipulating the Tax Base of Land and Building Tax in the Mining Sector for Geothermal Exploitation of Body of Earth for Exploration (KEP-46/2021).
On a side note, the provisions on the stipulation of tax base of land and building tax for exploitation in the geothermal mining sector have formerly been regulated in the Minister of Finance Regulation No. 186/PMK.03/2019 (MoF Reg. 186/2019). KEP-46/2021 is an implementing regulation of Article 20 paragraph (4) of MoF Reg. 186/2019 which regulates the prices of steam and electricity for the purpose of establishing the Tax Base of Land and Building Tax of the geothermal mining sector.
MoF Reg. 186/2019 outlines that the Tax Base of Land and Building Tax for body of earth for exploration in the geothermal mining sector is stipulated based on the replacement sale value. The replacement sale value refers to the product of the multiplication of steam and/or electricity revenue by the capitalization figure.
Steam and/or electricity revenue referred to above is the product of multiplication of steam production by the price of steam and/or the result of electricity production multiplied by the price of electricity. Production refers to products sold in the last year before the tax year in which the land and building tax becomes payable. Further, the provisions on prices of steam and electricity are stipulated through the issuance of KEP-46/2021.
KEP-46/2021 sets forth updates to the prices of steam and electricity. First, the prices of steam used to stipulate the Tax Base of Land and Building Tax for body of earth for exploration is set at IDR866/kWh. Second, the price of electricity used for determining the Tax Base of Land and Building Tax for body of earth for exploration is set at IDR1,248/kWh. The two prices apply to the stipulation of Tax Base of Land and Building Tax of the mining sector, particularly geothermal exploitation of body of earth for exploration.
The provisions on the prices of steam and electricity may be used to determine the Tax Base of Land and Building Tax starting the 2021 tax year. In the event of any errors in the provisions under this regulation, they shall be corrected accordingly.
This regulation has taken effect from the promulgation date, i.e. on 10 February 2021. With the enactment of this regulation, the provisions on the price of steam and electricity that were previously regulated under the Director General of Taxes Decree No. 185/PJ/2020, are revoked and declared invalid.