•    HOME   
•    NEWS   
•    BUSINESS   
•    INTERNATIONAL   
•    TECH   
•    SPORTS   
•    LIFE & TIMES   
•    OPINION   
•    MY JAKARTA   
•    BLOGS   

The Indonesian Coal Producers Association said on Wednesday that the criminal investigation into PT Kaltim Prima Coal, a subsidiary of the Bakrie group’s PT Bumi Resources, had not created unease among the country’s major coal producers.

“It’s only one particular case,” said Bob Kamandanu, the chairman of the association, known as the APBI. “The tax office needs to first prove their case in the court,” he added.

Many analysts believe the methods KPC and two other Bakrie companies used to calculate their taxes — incorrectly, according to tax officials — are widely used in the coal industry.

Norico Gaman, head of research at PT BNI Securities, said unclear implementation of the tax regulations had hurt the business climate for coal producers.

“I think there should be a coordination where industry players will not be evading taxes and the Finance Ministry will not be burdening the players with unnecessary taxes,” Norico said. “With clearer regulations on taxes, Indonesia’s competitiveness will improve in the eyes of the world.”

The Ministry of Finance’s Directorate General of Taxation has claimed that KPC underpaid its taxes by Rp 1.5 trillion ($160.5 million), while Bumi and PT Arutmin Indonesia, another Bumi subsidiary, underpaid by a combined Rp 600 billion.

The office claimed the companies filed incorrect tax declarations for the 2007 tax year.

On Tuesday, the South Jakarta District Court threw out a pretrial motion by KPC aimed at stopping the tax-evasion case against it from going to trial.

The ruling also means the Directorate General of Taxation can continue a criminal investigation it is pursuing against KPC despite a December 2009 Tax Court ruling that found the tax office’s preliminary investigation into KPC was invalid on procedural grounds.

Tuesday’s verdict came just a day after President Susilo Bambang Yudhoyono publicly issued a directive to the National Police to pursue anyone suspected of tax evasion. Political analysts interpreted the directive to be a warning to Golkar Party chairman Aburizal Bakrie, whose party has largely driven the House of Representatives’ investigation of the Bank Century bailout.

Aji Wijaya, KPC’s lawyer, insisted on Wednesday that the tax office investigation was illegal.

“Tuesday’s decision didn’t cancel the Tax Court’s decision,” he said. “Fundamentally, based on the Tax Court decision, the investigation is invalid and against the law.”

Yanuar Rizky, an independent market analyst, said he believed the KPC case was linked to the Century investigation in the House, and would damage the country’s reputation.

“This case will have a negative impact on our investment climate, because it shows foreign investors that politics is still the most influential driver of our nation,” Yanuar said.

“We cannot continue to be politically driven, as everything needs to be settled according to the law for our status to be good in the eyes of foreign investors.”

A highly placed source at the ta x office told the Jakarta Globe that the office is targeting major tax dodgers, including the Bakrie group, to set an example and make smaller businesses think twice before cheating on their taxes.