More than 10 oil-based companies currently operating on Batam, Riau Islands, threatened they would relocate to other countries, most possibly Singapore, because of double taxation that they have to bear.
The chairman of the Batam Industrial Estate Association, Oka Simatupang, said Thursday that the Free Trade Zone status for Batam had caused these oil-based companies to pay double taxes for the same product: once the product left the port of origin in Indonesia to Batam and secondly, when the products -- after being processed -- left the island.
The tax, he said, amounted to 10 percent. But then, they have to pay this tax twice, and it meant a lot for oil base companies.
"These oil-base companies are facing double taxation. Many companies have complained to us, and some of them said they would rather move to Singapore," Simatupang told Antara news agency.
Simatupang, who is also general manager of Kabil Industrial Estate (KIE) on Batam, cited an example that five companies at KIE had told him they would relocate to Singapore.
In Singapore, he said, value added tax is imposed only once, and that looks more attractive for these companies.
Therefore, he suggested that the government subject oil-base companies to the regular value added tax law rather than the Free Trade Zone rules.