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Tax collection guarantee key to resolving Freeport deadlock: Expert
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A scene of the underground activities of PT Freeport Indonesia in Tembagapura, Papua. (Kompas Print/File)
I
n a bid to settle its dispute with gold and copper miner PT Freeport Indonesia, the government needs to provide a long-term guarantee about the types of tax collection it will impose on the company, a tax expert has stated.
The local subsidiary of the United States-based mining giant Freeport McMoRan has temporarily halted operations due to the government’s demand that the contract of work (CoW) it signed in 1991 be converted into a so-called special mining license (IUPK) before extending its export permit, a move that will automatically annul the long-term investment stability guarantee provided in the CoW.
“It has to be clear first, what types of collection the government will impose on Freeport Indonesia within the next 20 years,” Center for Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo told The Jakarta Post recently.
(Read also: Indonesia prepares Rp 40t to acquire Freeport shares)
“If it’s an income tax [PPH], it should still be an income tax until the contract is over. If it’s a value-added tax [PPN], it should still be a value-added tax. Then, if the company’s copper concentrates are included as non-taxable goods today, it should also remain the same. That’s the kind of guarantee that Freeport Indonesia is looking for.”
Yustinus said that when the types of tax collection were clear, the amount of collection from each category would still be open for negotiations in the future.
Data from the Finance Ministry shows that Freeport Indonesia paid Rp 1.23 trillion (US$92.1 million) in export duties alone to the government throughout 2016. (bbn)
