IBRA may be exempted from paying taxes

IBRA may be exempted from paying taxes

JAKARTA (JP): The government is considering exempting the
Indonesian Bank Restructuring Agency (IBRA) from paying taxes on
gains from the sale of assets under its control.

Director General of Tax Machfud Sidik said here on Friday that
as a governmental institution, IBRA met all the criteria needed
to receive the tax-exempt status.

"IBRA fulfills the three main requirements for tax exemptions,
that it is established by the government, has all of its
operations funded by the state budget and is not involved in
commercial activities that will benefit itself," he said on the
sidelines of a discussion on appraiser companies.

Under the existing law, gains resulting from the transfer
(sales) of assets, including corporate stakes, are subject to
income tax of 10 percent.

Machfud said a new policy on the matter was being finalized by
the Ministry of Finance, IBRA and his office.

IBRA controls some Rp 600 trillion in assets transferred from
owners of ailing and closed banks as repayment for the massive
emergency funds they received from the government at the peak of
the country's economic crisis in early 1998.

The agency recently announced it had raised about Rp 13
trillion (US$1.7 billion) in cash from asset sales and loan
recoveries as of January this year.

Machfud said taxes were so far levied on the sale of the
assets but he declined to disclose the amount.

IBRA has targeted raising some Rp 17 trillion in cash this
fiscal year ending on March 31 to help finance the budgetary cost
of the government's bank restructuring and recapitalization
program.

IBRA said the remainder was expected to come from the sale of
its 45 percent stake in the publicly listed auto giant PT Astra
International, and a 30 percent initial public offering (IPO) of
nationalized Bank Central Asia (BCA).

IBRA earlier said that it expected to raise at least Rp 2
trillion from the Astra sale and around Rp 3 trillion from the
BCA offering.

For the upcoming April 2000-December 2000 state budget, IBRA
has targeted raising about Rp 16 trillion in cash.

Machfud said the tax office did not object to granting tax-
exempt status to IBRA.

"All the money IBRA raised from the asset sales will
definitely be delivered into the government's coffers with or
without the income tax scheme. So there will be no difference at
all," he said.

In order to increase the government's revenue, the tax office
will recommend increases in several types of revenue sources,
such as the price of stamps and certain types of value-added tax,
Machfud said without elaborating. (cst)