Govt prepares ruling on bad loan write-offs<\/p>\n
JAKARTA (JP): Tax Director General Fuad Bawazier said here a
\nnew government regulation, expected later this year, would tackle
\nsome controversial issues regarding the mandatory write-off of
\nbad loans by commercial banks.<\/p>\n
\"Currently, we, the central bank, the ministry of finance and
\nother related institutions are discussing various aspects of the
\nwrite-off scheme and hopefully we can issue a special regulation
\nbefore the end of this year,\" Fuad told the press after a hearing
\nwith the Budgetary Commission of the House of Representatives.<\/p>\n
He said the problem of taxation on the borrower's side is the
\nhardest part in the implementation of the mandatory write-off as
\nit is related to bank secrecy.<\/p>\n
He said that bad loans written off by banks are categorized as
\nincome for the debtor and are thus subject to income tax. But due
\nto bank secrecy, banks are not allowed to disclose the name of
\nthe borrower to the tax office.<\/p>\n
The tax directorate general has insisted that banks disclose
\nthe names of debtors whose bad loans are written off so that the
\nincome tax obligation of the debtor can be assessed properly.<\/p>\n
The central bank, Bank Indonesia, recently announced that it
\nwould go ahead with its mandatory write-off policy for banks even
\nthough implementation will require the disclosure of the names of
\ndebtors to the tax office.<\/p>\n
Bad loans in the banking industry were Rp 9.02 trillion
\n(US$3.8 billion) or 3.2 percent of total bank credits, as of
\nJune.<\/p>\n
Fuad said that his office and the central bank will reach an
\n\"optimal solution\" so that the mandatory write-off of bad loans
\ncan be implemented properly.<\/p>\n
\"This bank secrecy is a delicate issue. We cannot solve the
\nproblem emotionally. That would be counter-productive,\" he said.
\n(13)<\/p>",
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"sponsor": "Okusi Associates",
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