Timber companies accused of evading taxes

Timber companies accused of evading taxes

JAKARTA (JP): The government has accused timber companies in South and East Kalimantan of giving wrong financial statements in their tax returns, to lower their tax payments.

Baharuddin, head of the tax office for the two provinces, alleged on Saturday that the tax manipulation was the main reason behind the sharp drop of the provinces' tax revenues from timber companies.

Speaking to reporters in Balikpapan, the second largest city in East Kalimantan, he said that the significant drop in tax receipts from the timber industry in the 1994/1995 fiscal year was not justifiable.

The realization of the tax (income and value added tax) collection from timber companies in the two provinces dropped by about 50 percent, to Rp 25 billion (US$11.36 million) in the 1994/1995 fiscal year, which ended in March.

Executives of timber-related companies in the provinces, the country's largest log producers, said that their incomes had significantly dropped due to the sluggish export market. But Baharuddin said the reason was completely wrong.

He acknowledged that the market was not very promising for the local timber companies. "But the sluggish market only caused a 10 percent drop in the exports of timber-related products from the two provinces," he said, Antara reported.

He said the 50 percent drop in their tax payments was too large, compared to the 10 percent fall in their exports.

He said that his office has asked the timber companies to correct their financial statements for 1994/1995, before conducting a post audit.

The tax income rate, according to the new tax law, is 10 percent for the income bracket up to Rp 25 million, 15 percent for that from Rp 25 million to Rp 50 million, and 30 percent for that above Rp 50 million. The rate of the value added tax is 10 percent.

In the current 1995/1996 fiscal year, the government expects to receive approximately Rp 880 billion in tax revenues from the two provinces, which are also the country's major crude oil producers.(hen)