TAX NEWS - June 2010

Indonesia Tax: Tax evasion case against agribusiness firm PT Asian Agri

After more than three years, the Attorney General's Office (AGO) said Thursday that it could not proceed with the tax evasion case against agribusiness firm PT Asian Agri due to a lack of evidence.

"Tax office investigators have not found sufficient evidence as required by the prosecution team," Deputy Attorney General Darmono said after a coordination meeting between the AGO and House of Representatives' Commission XI, which oversees financial affairs, at the AGO in Jakarta.

He said the AGO had scheduled a meeting between the prosecution team and tax office investigators to discuss the case.

"We plan to hold the meeting tomorrow," he told reporters.

He said that in the scheduled meeting, the prosecution team would ask the tax office investigators about constraints they faced, so the two could formulate solutions to optimize a continued investigation of PT Asian Agri.

The alleged tax evasion was first reported to the authorities in 2006 by Asian Agri's then chief financial controller Vincentius Amin. At the time, he was a fugitive in Singapore because the company, owned by tycoon Sukanto Tanoto, accused him of embezzling funds.

Vincentius was arrested, tried and is currently serving an 11-year prison sentence for money laundering and forgery.

The high-profile tax evasion case has seen no developments since 2008, when for unknown reasons the taxation directorate, which had implicated 12 Asian Agri officials, handed the dossiers over to the prosecutors' office. Since then, the dossiers have gone back and forth between the directorate and the prosecutor's office several times.

Darmono said that Commission XI had promised to supply data to assist the AGO in solving other tax crimes.

Besides discussing the alleged PT Asian Agri tax evasion, the meeting also went over other tax crimes implicating several reputable companies, such as palm oil giants Wilmar International Limited (for allegedly receiving fictitious valued-added tax refunds) and PT Permata Hijau Sawit (for allegedly evading Rp 1.6 trillion in taxes).

According to Darmono, the meeting concluded that regular coordination meetings between the AGO and Commission XI would be necessary to optimize the eradication of tax crimes.

"We also are encouraging the House to produce a tax law that can boost state revenue from taxes."

Deputy chairman of Commission XI Melchias Markus Mekeng, said the poor performance of the tax directorate had become one of the most fundamental constraints for the commission in solving tax crimes.