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A seemingly unruffled Mochamad Tjiptardjo on Wednesday admitted Indonesia's tax department was wrong to claim it was owed Rp 19 trillion ($2.03 billion) in back taxes by the country’s state-owned enterprises, saying the true figure was probably less than half that.  

“The Rp 19 trillion was the whole figure of unpaid taxes recorded at the large tax office,” said Tjiptardjo, the director general for taxes at the Ministry of Finance, referring to the department that handles big taxpayers, including state-owned companies, privately owned conglomerates and wealthy individuals.

“The SOE debt is not actually that big, around Rp 7 trillion, more or less,” he said, adding that “some of that amount has been paid,” without providing details.

On Friday, Tjiptardjo had expressed concern that the tax bill this year would come in well under the government’s Rp 528.35 trillion target, saying the global economic downturn and natural disasters were largely to blame for the projected shortfall.

However, he said SOEs owed Rp 19 trillion in taxes as of the end of September. He singled out state railway operator PT Kereta Api and oil and gas firm PT Pertamina as the main culprits.

He did not mention specific figures for the two SOEs.

Tjiptardjo’s claim was denied on Tuesday by State Enterprises Minister Sofyan Djalil, who said the tax arrears were far too large to be accurate and vowed to seek clarification on the issue from the tax department.

Sofyan also noted that Kereta Api’s unpaid tax bill had arisen from a 2003 dispute between the railway operator and the tax department over value-added taxes imposed on freight services. This matter had been resolved and Kereta Api had started to pay off its arrears this year, he said.

Refusing to comment further on the Rp 12 trillion error, Tjiptardjo defended the department’s tough line on unpaid taxes. Going public delivered results because it embarrassed companies into compliance, he said.

“After we talked like that [to the media on Friday], PT Kereta Api immediately paid around Rp 136 billion in owed taxes. This is what we want.

“Before, no one ever talked about unpaid debt to the department. The only thing that happened was that middle-level officials got nervous. I wanted to get results so I talked to the media,” Tjiptardjo said.

Most of the current unpaid bills involved the value-added tax and income tax, he said.

“The bottom line is, we want taxes to be paid as soon as possible. If companies delay, there will be interest penalties that keep compounding.”

Tjiptardjo last week said the tax office only managed to collect Rp 377.86 trillion in taxes as of the end of September, or 65 percent of this year’s national target of Rp 528.35 trillion.

Analysts had earlier predicted that tax receipts would come in lower this year because the global recession had undermined prices for Indonesia’s commodity exports.

This had eaten into corporate income-tax receipts, the biggest contributor to government revenue, they said.

Officials had also warned that tax receipts would be lower because of a reduction in the corporate income tax from 30 percent to 28 percent, and tax breaks extended to the private sector and low-paid workers to counter the effects of the slowdown.