Timah must pay hundreds of billions in tax, if it fails to sell shares this year

State-owned tin miner PT Timah Tbk must finish its secondary offering this year if it wants to save billions of rupiah in the form of capital gain tax, Investor Indonesia said on Thursday.

The obligation is part of the agreement between the Ministry of Finance and Timah in 1998.

?If Timah does not complete the privatization process, there is only option left for the company, that is returning the tax facility to the government,? State Minister for State Enterprises' deputy for privatization and restructuring Mahmuddin Yasin said.

Mahmuddin said the value of the tax reached "hundreds of billions of rupiah".

Timah sold 35 percent of its shares to the public through initial public offering (IPO) in 1997. In 1998, it completed its restructuring program by spinning off its subsidiaries. Actually, this corporate action was taxable. But that tax was waived by the government on a condition that Timah must divest more shares through secondary offering in 2004.

Emboldened by the recent improvement in global tin prices, the government is planning to sell 10-14 percent of shares of Timah through a secondary offering this year. Actually, it made the same plan in 2002, but it was postponed due to weak global tin prices. (*)