What tax advantages/incentives are available to private parties carrying on mining activities?
Few special tax advantages or incentives are available to holders of KPs. However, KP holders are eligible for relief (in the form of a reduction to a maximum of 5 per cent) for a two-year period from import duty imposed on machinery, goods and materials. Mining services companies are also eligible for such relief (minister of finance Decree No. 135/KMK.05/2000 and Decree No. 28/KMK.05/2001). PMDN and PMA companies holding mining rights either as KP holders or COW contractors are eligible for relief or exemption from duties on imported capital equipment. COW contractors may also be eligible for other preferential tax treatments if contained in the provisions of their COWs. For example, a COW contractor may be eligible for a reduced rate of withholding tax on dividend payments made to a foreign shareholder if so provided in its COW.
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