Supreme Court asked to settle Timor tax dispute

Supreme Court asked to settle Timor tax dispute

JAKARTA (JP): Legal experts have called on the Supreme Court
to immediately issue a guideline to settle the ongoing dispute
between car producer PT Timor Putra Nasional (TPN) and the
Directorate General of Taxation.

Bismar Siregar, a former justice, said on Friday that it is
only the Supreme Court which would be able to clear up the
dispute over TPN's duty and tax obligations.

"The Supreme Court's order is an irrefutable instruction that
should be obeyed by other judges both at the district courts and
the State Administrative Court (PTUN) in Jakarta," he said.

TPN has been involved in a dispute with the tax office over
alleged unpaid import duty and luxury tax on the sedans it
imported from South Korea's Kia Motor Co. since 1996.

TPN, controlled by Hutomo Mandala Putra, the youngest son of
former president Soeharto, was appointed in 1996 by the
government to develop the national car program.

The company was exempted from import duty and luxury tax for
three years on the condition that the local content of the
national car known as Timor would reach 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 tax office said the company never fulfilled the
local content requirement and it was therefore subject to pay
both import duty and luxury tax.

The tax office then ordered TPN to pay Rp 1.8 trillion in
unpaid import duty and another Rp 1.6 trillion in luxury tax
sales from the cars it imported and sold since 1996. It said it
would confiscate the company's unsold cars if it refused to pay
the duty and taxes.

TPN rejected the order and brought the case to PTUN to annul
the tax office's decision.

The court ordered the tax office to temporarily delay its plan
to confiscate TPN's 14,000 unsold Timor cars until it issued its
final decision on the case.

The tax office, however, went ahead with its confiscation
plan, arguing that PTUN did not have the authority to handle the
case.

According to Bismar, it was wrong for PTUN to handle TPN's
case.

"PTUN should have never received the petition because they are
not authorized to do so," he said.

He also criticized TPN for handing over the case to PTUN.

"It is clearly stated in 1997 Law number 19 on Confiscation of
Assets in a Tax Case that tax payers should make petitions or
rejections against the tax office's decision only to the Board
for Tax Dispute Settlement Agency (BPSP)," he said during a
discussion on BPSP.

Vice chairman of BPSP Muslih Muchsin said TPN has never
brought the case to the agency.

"We can't do anything since TPN did not report to us. It is
too late to bring the case to BPSP," said Muslih, who was also
present at the discussion.(cst)