Tuesday, November 16, 2010

Tax office gets green light to probe Bumi Resources case

The Directorate General of Taxation will go ahead with its investigation of alleged tax irregularities involving PT Bumi Resources after the Tax Court on Wednesday rejected a complaint from the company’s finance director on the legality of the investigation.

Judge Hari Utomo, who led the court proceedings, said that the directorate general had not violated any rules in investigating the case as had been alleged by Eddie J. Soebari, the energy company’s finance director.

“He filed a lawsuit against us by saying that we had carried out the investigation without providing any notification or even a letter of investigation order,” Head of Jakarta Tax Office Riza Noor Karim said.

The investigation would be carried out on the grounds that it could lead to recovery of possibly unpaid taxes that might be worth millions of dollars, Riza said.

The case first emerged when the directorate announced last year it had been investigating possible tax evasion involving three mining companies, PT Bumi Resources, PT Arutmin Indonesia and PT Kaltim Prima Coal (KPC). All three companies have ties with Golkar Party chairman Aburizal Bakrie.

The combined value of the possibly unpaid taxes is estimated to be worth Rp 2.1 trillion, the tax office said. In March 2009, KPC filed a complaint with the Jakarta tax tribunal after it received a letter from the tax office saying the company was under investigation. KPC said the investigation was not complying with procedures.

The tax tribunal ruled in favor of KPC and ordered the tax office to stop the investigation. The justices ruled that the tax office was no longer allowed to investigate the alleged withholding of tax by KPC.

Objection and appeal director at the taxation directorate general Catur Rini Widosari said that the potential financial loss tied to Bumi could be bigger than initially expected, given the increase in the evidence available.

“Yet, we cannot mention the potential loss. The figures may vary. So, it would be better for us to
wait until the investigation is completed,” she said, adding that the taxation directorate general had no deadline to follow in carrying out the investigation.

Indonesia Corruption Watch (ICW) in a report issued earlier this year claimed that Bumi had failed to pay taxes and royalties worth up to $620 million.

Head of tax billing and investigation division at the taxation directorate general Erizal said that during the investigation, his institution was still cooperating with the national police. “But the authority to investigate the alleged tax evasion remains with us,” he said.

Eddie’s lawyer, Rana Sanjaya, refused to make comments on the verdict.

“We will discuss it. We may appeal, but I don’t want to give you any comments,” he said.

Source: thejakartapost.com

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