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)