Indonesia Sets Carbon Tax Rate at Rp30 per Kilogram

TEMPO.CO, Jakarta – Finance Minister Sri Mulyani assured that the carbon tax will take effect starting April 1, next year. It is regulated in the Taxation Harmonization Law (HPP) ratified by the House of Representatives (DPR).

“The carbon tax element will take effect on April 1, 2022, but (the implementation) will follow the road map of carbon or, in this case, is related to the climate change,” Sri Mulyani stated in the press conference broadcasted on the ministry’s YouTube channel Thursday, Oct. 7.

The carbon tax rate was set in Article 13 of Taxation Harmonization Law (UU HPP). The government and the House agreed on the lowest tariff of the tax at Rp30.00 per kilogram.

The rate is set higher than or equal to the carbon market price per kilogram of carbon dioxide equivalent (CO2e), its equivalent unit. Finance Deputy Miniter Suahasil Nazara explained that the imposition of the tax has economic value as it follows the cap and tax trade scheme.

The imposition of a carbon tax is claimed to prioritize the principles of justice and affordability. The rule also considered the business climate and people’s economy. Suahasil said that the implementation would be done gradually. The carbon tax will be applied for coal power plant (PLTU) in 2022-2024, before a full implementation in 2025, based on the readiness of the industry.
“The roadmap must be established and the law will give rooms to push for the green economy in Indonesia.”