Timor Putra 'must pay' Rp 3.09t in back taxes

JAKARTA (JP): PT Timor Putra Nasional automobile company, which is controlled by former president Soeharto's youngest son, Hutomo Mandala Putra, popularly known as "Tommy", was given until Dec.18 to pay Rp 3.09 trillion (US$412 million) in back taxes and import duties, Director General of Taxation Anshari Ritonga said on Friday.

"If the company fails to pay by the deadline, it will be served a letter of warning which gives it another 14 days to settle its tax obligation," Ritonga told reporters.

If the car company also fails to meet the second deadline, the tax collection will be entrusted to the State Receivership Agency, he added.

Companies referred to the State Receivership Agency usually end up in liquidation.

Timor Putra, which was assigned in 1996 by the then President Soeharto to develop a national car, was granted import duty and tax exemptions for importing completely built-up sedans from South Korea's Kia Motor Co..

The privilege was granted on the condition that the company would set up an assembly plant in the country in the second year of operation and gradually increase the use of local components.

However, the company failed to fulfill the terms and was therefore required to pay import duties and taxes due on the 40,960 cars it had imported.

The Attorney General's Office, which is investigating allegations of corruption, collusion and nepotism in the granting of special privileges to Timor Putra, has called the national car project a symbol of nepotism that may have cost the government US$ 1.5 billion.

The project, according to the Attorney General Andi M. Ghalib, was made possible only with the collusion of Soeharto and government officials.

Japan, the European Union and the United States took Indonesia to the World Trade Organization (WTO) in Geneva last year and won a ruling in their favor.

Timor Putra also owes hundreds of millions of dollars in loans to a consortium 16 private and state banks. (das/vin)