Coal association mulls suing govt

Indonesian Coal Association (APBI) said on Wednesday it would appoint a law firm and a tax consultant to look into the possibility of suing the government in state administrative court allegedly because its new tax policy could cause them experience serious cash flow problems.

They were Soemardipradja Taher & Partners and Price Waterhouse Coopers Indonesia (PwC), said an executive of APBI in charge of tax affairs, Mail (one name).

?The plan to appoint the two firms was based on suggestions from association members. They are to determine whether the decision to exempt coal from value added tax goes in line with existing working contracts; and whether it is reasonable for the association to file a law suit against the government,? Mail told Petromindo.com.

Recently, the government issued a new ruling, which exempts coal firms from imposing value added tax to domestic buyers, while imposing such taxes on briquette. Earlier, coal was subject to value added tax, while briquette was not.

Coal producers and traders complained that, with the new tax policy, coal firms could no longer include value added tax in coal prices for domestic sales. In the past, the inclusion of value added tax in coal prices enabled coal producers to offset similar taxes imposed on their imported capital goods.

They said they would experience serious cash flow problems in the future if the government does not revoke the tax policy. (godang)