T

he Finance Ministry’s Directorate General of Taxation says that it will strengthen its supervision of coal mining companies amid indications of potential legal violations in calculating their tax payments.

Tax office spokesman Dedi Rudaedi said in a press release sent to The Jakarta Post on Tuesday that more tax supervisors who understood the technical aspects of coal mining would be assigned to ensure that there were no legal violations in calculating the companies’ tax burden.

Dedi added that the technical ministry overseeing coal mining companies, the Energy and Mineral Resources Ministry, had the expertise to determine production, cost recovery and operational costs of coal miners.

It was also important to improve the exchange of information between the tax office and the Energy and Mineral Resources Ministry, as mandated by the 2009 Taxation, he added.

“With that effort, the tax office can examine and ensure that the information contained in the tax forms submitted by taxpayers in the coal mining sector is true,” Rudi said.

Deputy Energy and Mineral Resources Minister Widjajono Partowidagdo said that calculating operational costs in the coal mining sector was not as transparent a process as it was in the oil and gas sector.

“In coal, miners calculate operational costs by themselves, while in the oil and gas sector, the amount of the costs must be approved by [upstream oil and gas regulator] BPMigas,” he said.

Widjajono said that a coal and mineral mining company’s revenues were comprised of operational costs, the government’s share and the company’s share.

The higher the costs, the smaller the returns to the government would be, he added.

Indonesian Coal Mining Association (APBI) chairman Bob Kamandanu told the Post that all costs and expenditures reported to the tax office and the Energy and Mineral Resources Ministry were audited first so there was only a very small possibility for a coal miner to balloon their operational cost figures.

“We have a tax officer supervising each coal company. Our financial statements must also be audited by public auditors. We are also audited by the Development Finance Comptroller [BPKP],” he said.

Bob said that the operational costs of coal miners usually came from subcontractors who charged them for each project undertaken.

Coal mining companies checked the validity of prices listed on invoices submitted by subcontractors before approving them, Bob added.

“However, we will fully support it if the government wants to improve its supervision of coal mining companies to check whether there is something wrong,” Bob said.

Indonesia’s coal production is estimated to reach 370 million tons in 2011, with 65 million tons allocated for the domestic market.

The Energy and Mineral Resources Ministry previously said it expected investment in the mineral and coal mining sector to reach US$3.2 billion this year, a slight increase from last year’s figure of $3.18 billion.