Royalties, levies and taxes on Indonesian coal

The Indonesian state takes its share of coal in layers. It starts with royalty, a percentage of each sale that now rises with the coal reference price (Harga Batubara Acuan, HBA). Land rent, corporate income tax, VAT and regional taxes sit on top, and former contract holders pay more than ordinary licence holders.

The rates changed in 2025, and 2026 brought new export rules. Build a model from the regulations in force, not from an old feasibility study.

Royalty for IUP holders

Government Regulation 19 of 2025 sets the non-tax charges collected by the energy ministry. It took effect on 26 April 2025 and replaced Government Regulation 26 of 2022. For coal mined under a mining business licence (IUP), the royalty (iuran produksi) is a percentage of the price per tonne. The rate depends on the coal’s calorific value, the mining method and the level of the HBA.

For open-pit mines, which produce almost all of Kalimantan’s coal, the rates are:

Calorific value (kcal/kg)	HBA below USD 70	USD 70 to under 90	USD 90 or more
Up to 4,200	5%	6%	9%
Above 4,200 to 5,200	7%	8.5%	11.5%
Above 5,200	9.5%	11.5%	13.5%

Underground mines pay 1 to 2 percentage points less in each band. The ministry sets the HBA twice a month, as coal pricing explains. Royalty is worked out against a benchmark price derived from the HBA for each actual quality (Harga Patokan Batubara, HPB), so a sale made below the benchmark still pays royalty as if it had been sold at it.

Former contract holders on IUPKs

When a coal contract of work (PKP2B) expires, the company can continue under a special mining business licence (IUPK). Seven first-generation contracts had made that switch by April 2025, and the background is in coal licences.

These companies follow their own regime: Government Regulation 15 of 2022 as amended by Government Regulation 18 of 2025. On top of royalty, they pay a charge on coal sales that rises with the HBA, from 15% when the HBA is below USD 70 per tonne to 28% when it’s USD 180 or more. It’s calculated on the sale price after royalty and a per-tonne fee for using state assets from the old contract. They also pay the state 10% of net profit, 4% to the central government and 6% to the regions.

Land rent, income tax and VAT

Land rent (iuran tetap) is a fixed charge for each hectare of the licence area, paid every year whether or not the mine produces. Its rates are also set in Government Regulation 19 of 2025.

Corporate income tax is 22%, the standard rate under Law 7 of 2021 on the harmonisation of tax regulations. Dividends paid to a foreign shareholder carry withholding tax, reduced under a tax treaty where one applies.

Coal was outside VAT until the Job Creation Law of 2020 made it a taxable good. Domestic sales now carry VAT, and miners can offset the VAT they pay on fuel, equipment and services. The headline rate has been 12% since 1 January 2025, but under Minister of Finance Regulation 131 of 2024 most goods are taxed on 11/12 of the price, which works out at 11%. Exports are zero-rated.

Land and building tax is due on the licence area, and provinces and districts add their own taxes under Law 1 of 2022, such as the provincial tax on heavy equipment.

Export duty and export proceeds

The finance ministry announced a coal export duty of 1% to 5% for 2026. It was due to start on 1 January 2026 but didn’t. In March 2026 the target moved to 1 April 2026, with a rate approved by the president but not published. No regulation putting it into force could be confirmed by October 2026. Before you model it, ask a tax adviser whether a finance minister’s regulation has been issued, from what date, at what rates and how the rate is set.

Exports also go through a new channel. Under Government Regulation 24 of 2026, in force since 1 June 2026, coal is a strategic export commodity whose exports go through a state export company, PT Danantara Sumberdaya Indonesia. Until 31 December 2026 exporters still sell to their buyers directly and report to it. From 1 January 2027 it’s due to be the only exporter.

The proceeds have their own rule. Since 1 June 2026, under Government Regulation 21 of 2026, natural-resource exporters have to keep 100% of their export proceeds in special accounts at state-owned banks in Indonesia for at least 12 months, and can convert no more than 50% of them into rupiah. Moving money in and out covers what that means for cash flow.

Putting the charges into a model

• Read the royalty rate from the schedule for the coal’s calorific value, mining method and HBA band, and ask which HBA figure applies to your grade.
• Run the model at more than one HBA band, since the rate steps up as the HBA rises, and price the share sold at home under the domestic market obligation at the capped rate.
• For a former contract holder on an IUPK, add the sales charge and the 10% profit share.
• Ask for royalty and land rent receipts for the past three years and match them to sales. Unpaid amounts stay with the company after you buy it.
• Run a case with an export duty of 1% to 5% until its status is clear, and check the whole treatment with a tax adviser who works on mining.