Investor Presentaiton

5. CARBON TAX 1. Background a. To mitigate the risk of climate change and disasters in Indonesia, It is required to control the increase of greenhouse gas emissions in the atmosphere which cause the rise of the global temperature. b. Indonesia has been committed to reduce greenhouse gas (GHG) emissions by 29% (with own efforts) or 41% (with international supports) by 2030 under the Paris Agreement. C. Climate mitigation actions in Indonesia requires significant fundings. d. Economic players need to change their behaviour towards low-carbon activities. 2. Provisions in the Law on Harmonization of Tax Regulations a. A carbon tax will be implemented on a gradual basis according to a roadmap that will consider the development of a carbon market, achievement of NDC targets, sector readiness, and economic conditions. b. The implementation of a carbon tax will consider the principles of justice and affordability, taking into account the business climate and low-income people. C. The carbon tax rate is equal to the carbon price in the carbon market or higher, but with a minimum rate of Rp30.00 per kilogram of carbon dioxide equivalent (CO2e). d. The law takes effect on 1 April 2022 for the coal-fired power plant sector with a cap and tax mechanism. The scheme is in line with the implementation of the carbon market, which has already been running in the coal- fired power plant sector. 74

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