TEMPO.CO, Jakarta - The fiscal scheme negotiation between the government and Freeport Indonesia has not reached a common ground as the Finance Ministry insists on prevailing taxes, while, Freeport wants a nail-down tax agreement.
"There is no decision yet, we are still in the process of negotiation," the ministry's Fiscal Policy Office director for state income policy Goro Ekanto told Tempo on Monday yesterday.
Read: Govt Insists That Freeport Divest 51 Percent Stake
The fiscal scheme is one of the four points the government has been negotiating with Freeport since May. Once Freeport's contract ends in 2021, the company is obliged to change its status and become a holder of the special mining permit (IUPK).
With the status, Freeport is required to pay taxes and royalties under prevailing terms. Freeport also has to pay export duties in accordance with smelter development progress, which is 0-7.5 percent.
A Tempo source said that if the prevailing system is forced, the US-based miner could stop paying taxes. "Therefore, we need to come to an agreement to avoid this condition," he said.
However, during a visit to Tempo last week, Finance Minister Sri Mulyani was adamant about this requirement. She said that a fiscal formula should be able to boost state revenues, in accordance with Law No.4/2009 on Minerals and Coal.
Freeport spokesman Riza Pratama said they want a fiscal scheme like in a contract of work. The tax value, he said, should be established from the start as a guarantee for long-term investment stability. "We're fine with paying high taxes as long as the value is fixed," said Riza.
Read: Sri Mulyani Warns Freeport Indonesia over Contract Negotiation
The Center for Indonesia Taxation Analysis' executive director Yustinus Prastowo suggested the government to prepare special prerequisites in the fixed tax scheme.
"It could be nail down, but with articles that give the government the rights to negotiate when encountering conditions that may harm the state's finances."
PUTRI ADITYOWATI | ROBBY IRFANI | AYU PRIMASANDI | DESTRIANITA
