Tax dispute between govt, PSCs due to different opinion on regulation: BPMIGAS
Thursday, July 21 2011 - 01:43 AM WIB
BPMIGAS? Chairman R. Priyono, speaking at a hearing with the House of Representatives? Commission XI which oversees financial affairs, said the contractors insisted that the government should adhere to the Redundant Tax Avoidance Treaty already signed by Indonesia and their respective countries, under which they are only liable to pay a Branch Profit Tax (PBDR) of less than 20 percent.
The government however insisted the contractors have to pay a PDBR of 20 percent in line with the oil and gas law.
The hearing discussed "tax arrears" totaling about Rp 1.6 trillion (US$187.2 million) payable by 14 foreign PSCs operating in Indonesia, announced last week by the Corruption Eradication Commission (KPK). BPMIGAS data say the figures are the total amount that the 14 PSCs were supposed to pay from 1991 to 2008.
The contractors say the tax treaty is part of tax regulations that have to be implemented. The state comptroller BPKP however says the tax treaty reduces state revenue and violates the revenue sharing ratio of 85:15.
During the hearing, the Finance Ministry?s Director General of Taxation Fuad Rahmany said the 14 PSCs have been paying PBDR at the rates of 10 percent and 12.5 percent respectively for years based on bilateral tax treaties between Indonesia and the companies' home countries. He did not name the companies, only saying they were Malaysian and British firms.
Priyono proposed that the tax dispute be settled through the existing mechanism without having to hurt investment climate and sacrifice the confidentiality of the contractors as tax payers.
Priyono had said of the 14 PSCs, only three had yet to find a resolution to the tax disputes, while the 11 others have settled the dispute. He refused to identify them.
According to the agency, taxes from the upstream oil and gas sector reached Rp 55.8 trillion in 2010, up from Rp 50 trillion in the previous year (Giok)