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)