Home Blog Building a Sustainable Future: Carbon Taxation on Coal Use in Businesses Business Licenses | Company Registration Building a Sustainable Future: Carbon Taxation on Coal Use in Businesses InCorp Editorial Team 4 June 2025 4 minutes reading time Table of Contents The Coal Consumption Reach Its Higher Use in 2022 Regulations on Carbon Taxation for Businesses Carbon Tax Scheme in Indonesia Coal as an energy source has long been a subject of concern due to its significant contributions to air pollution and greenhouse gas emissions. As a result, many countries are turning towards implementing carbon taxation as a means to limit coal consumption. The carbon taxation policy aims to price the emissions caused by burning fossil fuels, such as coal. This policy also encourages businesses and individuals to seek alternative cleaner energy sources. The Coal Consumption Reach Its Higher Use in 2022 Annual reports on coal forecasts show that global use of coal is likely to rise by 1.2% by 2023. Despite increased efforts to reduce coal consumption in established countries, the demand is persistently high in developing Asian nations. This situation also forecasts that coal consumption will be unchanged by 2025. Due to higher gas prices and the fact that Russian gas is now scarce in Europe, more people are moving to coal. As a result, China, India, and Indonesia, the world’s top three coal producers, will set new production records this year. Still, despite high coal prices and comfortable profit margins for miners, there are no signs of a surge in investment in coal projects geared toward exports. It implies that coal will continue to be the most significant single source of carbon dioxide emissions in the global energy sector. Read more: The Future of the Coal Power Plant Business in Indonesia Regulations on Carbon Taxation for Businesses Carbon taxes are a penalty and fine imposed on a Company for the excess carbon emitted through its activities. The Indonesian Government specifically released Government Regulation No. 50 in the Year 2022. Regulations were released regarding coal taxation to ensure legal certainty with tax obligations. Within it, the Government clearly outlines how Carbon Taxes are to be paid either by the taxpayer himself or collected by Carbon Tax collectors. Taxpayers must keep a record of their activities that generate carbon emissions and the sale of carbon-containing goods used to calculate the carbon tax payable. The regulation was issued on 12 December 2022 and has been valid. Purposes for Implementing Carbon Taxation With the issuance of such a regulation, business actors and the general public are left wondering what the overarching purpose of implementing carbon taxes may be. The first and most important purpose is to reduce carbon emissions and carbon-related activities that are negative for the environment. It is also a fiscal tool utilized by the Indonesian Government to generate revenue. This tool also signals a shift to a greener economy. Lastly, the imposition of such taxes also alerts the international community regarding the significant shift and awareness of the Government. Carbon taxes are designed to enforce accountability and are determined with careful consideration not to discourage business entities from practicing business. Carbon taxes charged too high could drive out businesses from a country and shrink economies and growth. Pros & Cons of Carbon Taxation Much like any decision, implementing carbon taxation has pros and cons. The move that pushes carbon-intensive industries to comply with strict emission rates is under a lot of pressure. The policy disincentivizes companies to produce more and push for economic growth. Another potential harm from this policy is the trade relationship shared between countries. A common concern shared by stakeholders is the rapid industrialization of the manufacturing sector, which is the backbone of any economy, especially Indonesia. The pros are obvious. Such policies act as a considerable contribution to fight climate change and at a lower cost. Immediate environmental benefits, including improved public health, reduced deaths, and cost savings from reduced pollution mitigation efforts, are brought about by introducing carbon taxes. Carbon Tax Scheme in Indonesia The new Carbon Tax Government Regulation is released under the legal umbrella issued before Law No. 7 of 2021 concerning Tax Harmonization. Both taxpayers who carry out activities that produce carbon emissions and carbon tax collectors are required to fill out a tax return by the provisions of the prevailing laws. The deadline for submission of Tax Returns is Annual Tax Returns by four months after the end of the calendar year or Periodic Tax Returns by 20 days after the end of the tax period. If the taxpayer does not perform this obligation, then the taxpayer is subject to sanctions under the provisions of the legislation. Further provisions regarding the appointment of the intended carbon tax collector and specific criteria will be regulated in a ministerial regulation. As explained above, tax matters are cumbersome and heavily regulated. However, it also continues to evolve and adjusts to the current circumstances. To ease the burdens of businesses, InCorp Indonesia provides services with business licensing and company registration. By entrusting InCorp Indonesia (An Ascentium Company), businesses can allocate more time to core activities. Read Full Bio Verified by Hotdo Nauli Senior Legal & Delivery Manager at InCorp Indonesia Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). Frequently Asked Questions What responsibilities does a PMA company have in terms of non-tax compliance? In Indonesia, a PMA company is typically required to submit various reports to relevant authorities, such as: Annual financial report Investment realisation report Manpower and employee welfare report Expatriate utilisation report Company loan repot Foreign exchange and prudential principles report However, depending on the business activities and classification relevant authority may require additional reports from a PMA company. What is the minimum shareholder requirement to incorporate a PT? The minimum number of shareholders to incorporate a PT is two Can a PMA company hire expats in Indonesia? Yes, PMA companies in Indonesia can hire expatriates, but certain positions are restricted by the Ministry of Manpower. Expatriates need both working and stay permits, and employers must employ Indonesian counterparts for each expatriate employee, typically at a ratio of at least one Indonesian counterpart per expatriate. Can a PMA company keep non-Rupiah bookkeeping and use a language other than Indonesian? For tax purposes in Indonesia, companies must maintain their books in Rupiah, using the Indonesian language, and store them within the country. Exceptions for using USD and English in bookkeeping require prior notification to the authorities and any use of languages other than Indonesian needs approval from the Ministry of Finance. Get in touch with us. Lead Form Updates Full NameEmailPlease provide corporate email where possiblePhone NumberOffice SetupWhich city are you planning to expand into?JakartaSemarang/Central JavaBali/LombokBatam/SumateraSurabaya/East JavaOther ProvincesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Package (20% OFF)[SPECIAL PACKAGE] Product Registration + License Holder (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (25% OFF) + Office Space (Private Office 30% OFF)[SPECIAL PACKAGE] Company Registration + Investor KITAS (25% OFF)[SPECIAL PACKAGE] Accounting + Tax Services+ Annual Fintax Report (20% OFF)[SPECIAL PACKAGE] Payroll Services for Executive Role (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (20% OFF) + Office Service (25% OFF)[SPECIAL PACKAGE] Company Registration + Micro Finance Services (25% OFF)[SPECIAL PACKAGE] Property Assistance: Due Diligence + AJB Purchase/Lease Agreement (25% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesServices Company Registration Renting Virtual and Serviced Office Business and Import Licenses Corporate Recovery and Insolvency Closing of Company (Dissolution) Land and Property Ownership Shelf Company Local NomineeServices Accounting and Tax Reporting Audit and Review Transfer Pricing Compliance Tax RefundHuman Resource Sub Services Payroll Outsourcing Employer of Record Recruitment and HR Establishment Employment ServiceServices Business Visa Work Permit and KITAS Dependent Visa (Spouse and Family) OtherBusiness Visa Subservices Business Visa Visit Visa Visa ExtensionServices Medical Device Beauty (Skincare and Cosmetic) Food and Beverage Health Supplement Household Product Halal Certification TrademarkServices Legal Consultation Legal Agreement Service Due Diligence and Background Check Company Documents RevisionBusiness Advisory Business Advisory Services ESG Reporting & Advisory Internal Audit Risk ManagementMore Services Market Research and Analysis Local Distributor and Partner Bank AccountMessageSubmit What you’ll get A prompt response to your inquiry Knowledge for doing business from local experts Ongoing support for your business Disclaimer The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website. More on Business Licenses Business Update: Domicile Letter No Longer Required for Business Establishment in Jakarta Read more Update from BKPM: Three-Hour License Service For Energy Sector Read more How to Set Up A Joint Venture Company in Indonesia Read more