Thousands of Defiant Foreign Investment Companies Probed
TEMPO.CO, Jakarta – Finance Minister Bambang Brodjonegoro said that a total of 4,000 foreign investment (PMA) companies were under scrutiny over tax evasions.
“Mostly, [the companies] practiced transfer pricing,” Bambang said at his office on Tuesday, October 27, 2015.
Bambang explained that the probe was not about the potential of income to be received by the state, but rather the law enforcement for all taxpayers.
“Besides, calculating the potential [of income] will be difficult, because it has happened since long ago,” Bambang added.
Earlier on Friday, October 23, 2015, Bambang said that the government was blacklisting 4,000 defiant PMA companies. Bambang revealed that some of the companies did not even pay taxes at all.
“They have been defiant taxpayers for 10 to 20 years,” he said.
Yustinus Prastowo, the executive director of the Center for Indonesia suggested that the government must figure out the causes of the tax evasions “whether [the companies] suffered losses, or were just plain delinquent.”
Yustinus added that the government could look into PMA companies’ financial statements and annual tax return forms. Without taking the move, Yustinus added, the government could create a new uncertainty condition for investors.
Yustinus confirmed that foreign transfer pricing, thin capitalization and treaty shopping practices were common among foreign companies. Such practices could cause state losses of Rp100 trillion (US$7.1 billion).
