Criteria set for debtors seeking tax relief<\/p>\n
JAKARTA (JP): Chairman of the Jakarta Initiative Task Force
\n(JITF) Bacelius Ruru said on Wednesday that companies whose debt
\nrestructuring process was mediated through the task force must
\nmeet certain criteria to enjoy a tax relief facility.<\/p>\n
Ruru said the criteria included the companies' prospects for
\nsurvival in the post-restructuring period.<\/p>\n
\"It depends on whether the debt restructuring will result in a
\ncompany that is in a commercially viable position to continue
\noperation or not,\" he told reporters on the sidelines of a
\ndiscussion on debt restructuring.<\/p>\n
Ruru said the technical criteria would be decided by the newly
\nformed one-stop facilitation team which groups several related
\nsenior government officials and is coordinated by the chairman of
\nJITF.<\/p>\n
The House of Representatives approved earlier this week an
\namendment to the country's income tax law which allows a tax
\nbreak for companies whose debt restructuring process was mediated
\nthrough the JITF.<\/p>\n
An indebted company whose debt restructuring process included
\na debt \"haircut\" facility from its creditors was supposed to pay
\ntax under the previous income tax law because the company
\ntheoretically enjoys income from the debt reduction.<\/p>\n
Ruru said according to the new tax law, the tax break would
\nonly be given to companies whose debt restructuring process was
\nmade through the JITF, not the Indonesian Bank Restructuring
\nAgency (IBRA).<\/p>\n
\"That's the will of the lawmakers. The tax relief facility is
\nonly for the JITF,\" he said.<\/p>\n
He explained the tax break was part of the incentives to be
\nprovided through the JITF to debtors who were \"cooperative\" in
\ntheir debt restructuring process.<\/p>\n
He said cooperative debtors were those who displayed good will
\nto settle their obligations and had attended a scheduled
\ncreditor-debtor meeting.<\/p>\n
JITF was formed by the government in 1998 to help accelerate
\nthe debt restructuring process of the country's business sector.
\nBut the task force only plays a mediator role. Unlike IBRA, it
\nhas no legal power to seize assets or force debtors to repay
\ntheir obligations.<\/p>\n
The task force aims to help restructure some US$10.5 billion
\nof corporate sector debts this year, and as of July it had
\nrestructured about $5 billion.<\/p>\n
JITF can receive its \"debt restructuring case\" from debtors,
\ncreditors or from the Financial Sector Policy Committee (FSPC).<\/p>\n
The committee, which groups several senior economic ministers,
\nsaid it would gradually transfer the debt cases in which IBRA was
\na minority creditor.<\/p>\n
IBRA has received more than Rp 200 trillion worth of non-
\nperforming loans from closed banks and recapitalized banks.<\/p>\n
Ruru said there were incentives to be given by Bank Indonesia,
\nthe country's Capital Market Supervisory Agency (Bapepam) and the
\nJakarta Stock Exchange (JSX).<\/p>\n
He said the JITF signed an agreement with the JSX in which
\ncooperative debtors would be protected from being delisted from
\nthe exchange within a certain time period.<\/p>\n
But Ruru said in addition to the incentives, JITF would also
\nimpose sanctions on uncooperative debtors.<\/p>\n
He explained that once debtors and creditors entered the JITF
\nrestructuring mechanism, they would be given a deadline to
\ncomplete certain restructuring stages, and if debtors failed to
\nmeet the deadline they would be labeled uncooperative.<\/p>\n
He said uncooperative debtors would be handed over to the FSPC
\nand later transferred to the Attorney General's Office to file
\nfor bankruptcy.<\/p>\n
\"The government of Indonesia is committed to making the debt
\nrestructuring program successful,\" Ruru said.<\/p>\n
He said the FSPC was planning to transfer more cases to JITF
\nto push for more debt restructuring deals.<\/p>\n
\"The FSPC is considering transferring between one and three
\ncases a month. That is a large volume, but I think it's still
\nmanageable for us,\" he said.<\/p>\n
But he added a stable exchange rate was crucial to ensure a
\nsuccessful debt restructuring process.<\/p>\n
He said the current exchange rate of Rp 9,000 to the U.S.
\ndollar was not \"favorable\".(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/criteria-set-for-debtors-seeking-tax-relief-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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