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KPK, finance ministry chase down tax-dodging fuel firms

Source
Jakarta Globe - July 19, 2011

Ulma Haryanto – Indonesian Antigraft officials revealed on Tuesday that they were working with the Finance Ministry to attempt to recover Rp 1.6 trillion ($187 million) owed in unpaid taxes by 14 oil and gas companies.

"We will summon any government officials from whom we need information," said Busyro Muqoddas, the chairman of the Corruption Eradication Commission (KPK). "Our research and prevention department is continuing to assess ways to recover state assets."

The probe, focused for now on the tax office, was based on a meeting last month with Hadiyanto, the Finance Ministry's director general of state assets, regarding the recovery of funds owed to the state.

Busyro said the KPK had so far identified Rp 1.6 trillion owed by 14 oil and gas operators, but the nongovernmental Indonesia Corruption Watch claimed on Monday that 33 such firms had racked up $583 million in back taxes since 2008.

Asked about the difference, the KPK chairman said the probe was still in progress. "We're still studying the industry and ways to improve the [revenue collection] system," he said.

Firdaus Ilyas, ICW budget coordinator, said the watchdog's investigations were based on 2010 data from the Supreme Audit Agency (BPK). He said operators tended to refuse or dispute payment because of the number of different ways that the tax calculation could be interpreted.

"Even though the formula for calculating the tax is simple, it's up to the government to show the political will to go after these tax arrears," he said.

He called on the KPK to fully investigate the case. "In the midst of depleting oil and gas reserves, the KPK has to supervise and follow through if they find any [attempted bribery of tax officials by the companies] in the settlement of tax liabilities."

ICW chairman Danang Widoyoko added that the government should use its power over the oil and gas firms to recover the unpaid taxes. "It's possible that foreign pressure or corruption is weakening the government's bargaining position," he said. "The KPK needs to see what's behind this tax problem."

Denny Indrayana, a member of the Judicial Mafia Eradication Task Force, agreed that tax regulations needed to be better enforced, given the importance of oil and gas taxes as a source of revenue for the state.

"The KPK, the task force and tax investigators routinely communicate with one another other," he said. "Our goal is that whenever there's a violation, we can act immediately."

He also said he was satisfied with the work of the tax department under Finance Minister Agus Martowardojo and his predecessor, Sri Mulyani Indrawati. "But the tax system is not perfect yet. It needs improvement," Denny added.

The tax office has been under a cloud after the case of Gayus Tambunan, a former mid-ranking official, revealed massive fraud and a deeply ingrained network of brokers and officials accommodating corporate tax cheats in exchange for bribes.

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