Luwu Timur government faces criticism over PT Vale Indonesia tax dispute

The Luwu Timur Regency government in South Sulawesi is facing scrutiny following the issuance of an Underpayment Tax Assessment Letter (SKPDKB) to PT Vale Indonesia. The dispute concerns the imposition of Non-Metallic Mineral and Rock (MBLB) taxes on overburden material used in mining operations.

Critics and academic observers, including Dr. Ibnu Hadjar from UIN, argue that the material in question is utilized for land rehabilitation and reforestation rather than for commercial sale or commodity trade. Because the material is not being sold, there are concerns that taxing it may violate existing laws, specifically Law Number 3 of 2020 regarding Mineral and Coal Mining and Law Number 1 of 2022 regarding Financial Relations between Central and Regional Governments.

The controversy stems from Luwu Timur Regional Regulation Number 9 of 2023, which classifies mining overburden as a taxable MBLB object. Observers warn that such fiscal policies, aimed at increasing regional original income (PAD), could create legal uncertainty and negatively impact the investment climate within the mining sector.