The commitment of Indonesia to manage the climate change crisis is reflecting in the carbon emission tax policy that was issued last year under Law No 7 of 2021 on the Tax Law Harmonization (“Law No. 7/2021”) in conjunction to Government Regulation No. 98 of 2021 on the Implementation of Economic Carbon Value to Achieve National Contribution Target and Glasshouse Gas Emission Control in the National Development (“GR No. 98/2021”).
With due regard the comprehensive implementation of the Carbon Economic Value on each unit of the glasshouse gas emission resulted from the human activities and economic activities, the carbon tax collection would be based on the carbon content and/or potential carbon emission and/or the carbon emission amount and/or the Mitigation Climate Change Action activities. Article 13 paragraph 1 of Law No. 7/2021 stipulates that the Carbon Tax is implemented to the carbon emission that gives negative impacts to the environmental. The state revenue of Indonesia under the basis of Carbon Tax can be allocated for the climate change crisis controlling. Such allocation will be further determined by the House of Representative of Republic Indonesia in the State Budget.
Carbon Tax Road Map