Geothermal investors appeal to Supreme Court

Investors involved in the development of geothermal energy in the country have appealed to Supreme Court after a lower court ruled in favor of the Tax Directorate General in their suit against the imposition of valued added taxes on their activities, Suara Karya reported on Friday.

Riki Ibrahim, the acting chairman of the International Geothermal Association, said that the district court?s decision would backfire the government?s efforts to attract foreign investors in the country, particularly in the geothermal energy sector.

"For investors involved in the geothermal energy development, the imposition of the value added tax would cause financial losses of millions of U.S. dollars," he said.

The geothermal investors recently sued the Tax Directorate General for its refusal to withdraw valued added tax against the investors. According to them, they have no obligation to pay taxes other than corporate taxes and taxes on dividend and royalties.

They said that based on the Government?s Law No 11, 1994, investors who are involved in oil, gas and other energy activities are exempted from valued added tax payment on all transactions related to their exploration activities.

But according to the Tax Director General, the exemption facilities had been annulled on December 31, 1991, meaning that beginning January 200, all investors involved in the energy sector, have to pay the value added tax. (*)