Dion Bisara

A pedestrian walks past a Bakrie company sign in Jakarta. (JG Photo)

Tax Office Lauds Bakrie Loss

Indonesia's Directorate General of Taxation welcomed the South Jakarta District Court’s rejection on Tuesday of a bid by PT Kaltim Prima Coal to prevent a tax-evasion case against it from going to trial, saying the decision would speed up its investigation into the Bakrie group company.

“With this verdict, our investigation should proceed much faster,” said Pontas Pane, interim director of intelligence and investigation at the directorate.

“We were distracted by the pre-trial [motion].”

The court’s verdict came just a day after President Susilo Bambang Yudhoyono 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 over the House of Representatives’ investigation of the Bank Century bailout.

KPC is a subsidiary of the politically connected Bakrie group’s PT Bumi Resources. Bumi and PT Arutmin Indonesia, another Bumi subsidiary, are also under scrutiny for allegedly evading a combined Rp 2.1 trillion ($225 million) in taxes from the 2007 tax year.

The Directorate General of Taxation has claimed that KPC underpaid its taxes by Rp 1.5 trillion, while Bumi and Arutmin underpaid by a combined Rp 600 billion. The office claimed the companies filed incorrect tax declarations in 2007.

The directorate general has elevated its cases against KPC and Bumi to the status of criminal investigations, while the probe against Arutmin remains in the preliminary stage.

KPC’s lawyer, Aji Wijaya, denied that his client had evaded taxes. “KPC has fulfilled all its tax obligations in accordance to the tax report and the Directorate General of Taxation has never given any explanation to us, as the taxpayers, whether there has been some underpaid taxes by KPC,” he said.

“All of a sudden, the directorate conducted an investigation by putting forward preliminary evidence,” he added.

A source at the office said the dispute with KPC dated from March 2008, when the coal miner filed its tax return for 2007 and claimed it had overpaid taxes by Rp 30 billion. The tax office examined KPC’s financial reports and determined that the firm actually owed Rp 1.5 trillion in unpaid taxes, the source said. The sales figures KPC listed in its tax return were out of sync with the office’s own estimates, said the source, who asked to remain anonymous.

Based on its suspicions that KPC may have underpaid its tax, the tax office in March 2009 launched a preliminary investigation to seek further evidence. It then elevated it to a criminal investigation on March 30, 2009.

The source said KPC had submitted a “tax correction” report on April 9, 2009, which updated its sales figures, bringing them closer to the tax office’s estimates.

In the update, KPC acknowledged owing Rp 800 billion in taxes for 2007, which it then paid between April and October 2009, the source said.

But because the tax office had already launched an investigation into KPC, it refused to acknowledge KPC’s payment, despite having received it, the source said.

KPC made the payment because it wanted to avoid being liable to pay a higher amount of tax, the source said.

If the criminal case against KPC succeeds, it will be liable to pay Rp 1.5 trillion in unpaid taxes as well as a Rp 6 trillion fine, four times the alleged amount of underpaid tax, the source said.

However, if the tax office acknowledged KPC’s Rp 800 billion payment it could only recover Rp 3.5 trillion — the Rp 700 billion in alleged unpaid taxes plus a Rp 2.8 trillion fine, the source said.

Pontas said he was unsure when the tax office would be able to bring the case against KPC to trial. However, he said it would summon Robert Bismarka Kurniawan, a former KPC director who signed the 2007 tax declaration.

Bumi owns 70 percent of KPC and Arutmin. Indian company Tata Power owns the remaining 30 percent of both companies.

The two companies own coal projects containing 2.1 billion tons of reserves with an estimated value of at least $16 billion.

Your View

See Result