Coal miners? royalty arrears almost equal to their VAT claims: BPKP

Coal royalties withheld by Indonesia?s six major coal miners are almost equal to the amount of valued-added tax refunds they claimed from the government, according to an audit of the State Development Finance Comptroller (BPKP).

In its audit, BPKP said that their total royalty arrears were almost equal to their valued added tax (VAT) refund claims which reached about Rp 7.18 trillion. However, the agency said that in addition to the royalty arrears, the six mining companies also owed about Rp 610.34 billion to the government in unpaid sales tax payment.

The six miners were therefore obliged to pay the unpaid sales taxes to the government even though their VAT claims would be significant enough to pay off the royalty arrears, BPKP?s chairman Didi Widayadi told reporters in Jakarta on Monday.

The agency has been asked to conduct the audit to help solve a dispute between the government and the six coal miners -- PT Kideco Jaya Agung, PT Kaltim Prima Coal, PT Kendilo Coal Indonesia, PT Arutmin Indonesia, PT Berau Coal and PT Adaro.

The row escalated in August last year when the government banned 14 executives from the six coal companies from traveling overseas over allegations their companies had evaded royalty payments between 2001 and 2007 amounting to Rp 7 trillion.

The companies repeatedly defended their decision not to pay the royalties, saying the government owed them value-added tax (VAT) reimbursements, as stipulated in work contracts signed between 1979 and 1980.

The government then assigned the BPKP to audit both the royalties and the VAT reimbursements.

In a letter signed on Aug. 9, five of the companies -- PT Kideco Jaya Agung, PT Kaltim Prima Coal, PT Arutmin Indonesia, PT Berau Coal and PT Adaro -- stated they would pay their entire obligation arising from the audit. (*)