Government threatens to seize assets of Timor executives

Government threatens to seize assets of Timor executives

JAKARTA (JP): The government threatened on Tuesday to
confiscate assets of PT Timor Putra's senior executives,
commissioners and shareholders if the value of the company's
assets fell short of the amount of back taxes owed by the
company.

Director General of Taxes Hadi Poernomo said here on Tuesday
his office was valuing the assets of the car company, which owes
the government Rp 3.2 trillion (about US$320 million) in back
taxes.

"If it is not enough then we will take the shortfall from the
board of directors. If its still not enough then from the board
of commissioners' assets, and if that's also not enough then from
the shareholders' assets," he said.

Hadi was speaking to reporters after accompanying Vice
President Megawati Soekarnoputri and House of Representatives
Speaker Akbar Tandjung to hand in their tax returns to the
directorate general.

Early this month the Supreme Court ordered Timor to pay its
taxes and duties, overruling an original agreement between the
Indonesian Bank Restructuring Agency (IBRA) and South Korea's Kia
Motor to restructure the company.

Before the ruling, the government had agreed to restructure
Timor's $521.5 million debts, which would result in IBRA owning
69 percent of the new joint venture company PT Kia Timor Motors
(KTM) and Kia Motor of South Korea and Timor owning the
remainder.

The ruling gave the Directorate General of Tax precedence over
IBRA in regard to claims on Timor's assets, Hadi said.

"We had the first claim, so whatever happens the payment of
taxes has first priority," he said, adding that he was waiting
for the commission to take over the assets from the Supreme
Court.

Timor Putra Nasional, owned by former president Soeharto's
youngest son Hutomo "Tommy" Mandala Putra, was appointed in the
1990s to develop a national car project in cooperation with South
Korean automotive company Kia Motor.

The company was exempt from import duties and luxury tax for
three years, on condition that the cars' local content reached at
least 20 percent in the first year of the program, 40 percent by
the end of the second year and 60 percent by the end of the third
year.

However, the company defaulted on the requirements and lost
its powerful government support after the ousting of Soeharto in
May 1998. It was later ordered to pay Rp 3.2 trillion in back
taxes and duties.

Also submitting his 2000 tax return on Tuesday was Sophan
Sophian, a legislature of the House of Representatives and member
of the Indonesian Democratic Party of Struggle.

President Abdurrahman Wahid was scheduled to hand in his tax
return on Thursday. The deadline for filing 2000 tax returns is
Saturday.

Hadi said that the tax receipts dropped slightly to Rp 92.14
trillion in 2000 from Rp 95.57 trillion in the 1999/2000 fiscal
year due to the shorter period of the fiscal year.

The 2000 fiscal year was from April to December due to the
change in the start of the fiscal year from April to January
beginning this year.

He said that tax receipts for the first two months of the
current fiscal year had reached a total of Rp 21.7 trillion,
about 14 percent of the Rp 152.4 trillion targeted for the whole
year.(tnt)