Govt Offers New Tax Scheme in Freeport Negotiation Contract

TEMPO.CO, Jakarta - The fiscal scheme renegotiation between the Indonesian government and Freeport Indonesia is in a deadlock. The Ministry of Finance persists to go with the prevailing dynamic scheme.

Meanwhile, Freeport demands a legal certainty with a fixed tax system until their contract end or nail down. “There has no decision yet, it’s still being negotiated,” said Goro Ekanto, a Finance Ministry official, today, August 8.

Read: Sri Mulyani Warns Freeport Indonesia over Contract Negotiation

The fiscal scheme is one of four aspects in the contract renegotiation that are being discussed by both parties since May. As Freeport’s work contract expires in 2021, the company must change its status into a special mining business permit (IUPK).

The new status requires Freeport to pay its taxes and royalty under prevailing terms. The US-based mining company giant must also pay an export excise based on the development of their smelter constructions of 0-7.5 percent.

A source of Tempo said if the prevailing scheme is being forced, it is possible that Freeport might stop paying its tax.

Freeport spokesman Riza Pratama said that the company wants a fiscal scheme in the working contract. The tax rates must also be fixed since its initiation as the guarantee for long-term investment stability.

PUTRI ADITYOWATI | ROBBY IRFANI | AYU PRIMASANDI | DESTRIANITA