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Govt vs mining firms tax row looms as one won't comply
The royalty dispute between the government and mining companies is likely to crop up again as a "giant" coal company has refused to show goodwill by settling the problem, despite an approaching deadline, the tax chief says
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The royalty dispute between the government and mining companies is likely to crop up again as a "giant" coal company has refused to show goodwill by settling the problem, despite an approaching deadline, the tax chief says.
Director General of Taxation Darmin Nasution said Wednesday the office had given the mining companies in dispute until Feb. 28 to pay previously evaded taxes.
"There is one group that has not paid the royalties. The others have settled the payments," he said, refusing to name the company.
"Their payment should be settled before the Sunset Policy ends (on Feb. 28)."
Last year, six coal companies - PT Kideco Jaya Agung, PT Kaltim Prima Coal, PT Kendilo Coal Indonesia, PT Arutmin Indonesia, PT Berau Coal and PT Adaro Indonesia - opened up a dispute with the government by refusing to pay outstanding coal royalties.
Arutmin and Kaltim Prima are subsidiaries of PT Bumi Resources, partly owned by PT Bakrie & Brothers controlled by the politically wired family of Coordinating Minister for People's Welfare Aburizal Bakrie.
These coal firms refused to pay the royalties as they claimed the tax office had yet to refund their value added tax (VAT). The companies owed the state US$598 million and Rp 1.6 tril-lion (US$140.96 million) between 2001 and 2007, according to the Development Finance Comptroller (BPKP).
The government banned 14 executives from the six companies from leaving the country for refusing to pay the coal royalties from 2001 to 2007 and to encourage compliance.
The BPKP eventually stated that the coal firms' liabilities were equal to the VAT refund owed by the government.
"These figures are equivalent to the VAT that is supposed to be reimbursed by the government," BPKP chairman Didi Widayadi said.
Finance Ministry director general of state wealth Hadiyanto said earlier it was either that the government should refund the VAT to mining companies and receive the coal royalties, or the firms should pay the shortfall between the royalties and the VAT refund, or about $6 million.
However, it is unclear whether Darmin's claim of a payment shortfall is related with the $6 million or related to the 2 percent interest on overdue royalty payments every month until all payments are settled.
The coal mining price boom last year had generated Rp 43.15 trillion for the government from royalty proceeds, due to commodity prices.
In 2007, the proceeds had already reached Rp 37.4 trillion, up from Rp 29.82 trillion in 2006.
The currently continuing slump in the global prices of oil, gas and coal are important worrying factors affecting state income from these markets, l eading government not to expect too much revenue this year.
Mining firms spent $1.65 billion on investment, up from $1.25 billion in 2007, according to the Energy and Mineral Resources Ministry.
Indonesia has some of the world's biggest reserves of tin, coal, copper, gold and nickel.
