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President Susilo Bambang Yudhoyono is demanding an immediate resolution to the coal royalty and tax refund problem so as to avoiding damaging impact to the country's investment climate.
"The President has summoned Energy and Mineral Resources Minister Purnomo for an explanation regarding the matter," State Secretary Hatta Radjasa told reporters in Jakarta on Wednesday.
Hatta said the President advised Purnomo and Finance Minister Sri Mulyani to find an immediate solution to the problem without disregarding existing laws and regulations.
The government earlier this month banned executives from 12 mining companies from traveling abroad as their companies had failed to pay royalties worth a total of Rp 7 trillion (US$763 million) from coal trading carried out within the period 2001- 2007.
The companies have refused to pay the royalties because the government did not give them tax refunds within the same period as agreed upon in the work contracts signed by them and the government.
In refutation, the government clarified that tax refunds were no longer available since the government issued a regulation in 2000 exempting coal from the list of commodities to be given value-added tax (VAT).
Nevertheless, the director general for minerals, coal and geothermal affairs, Bambang Setiawan, clarified Tuesday that the government would grant the coal firms a form of fiscal reimbursement that was still being discussed with the Finance Ministry.
Investment Coordinating Board chairman M. Luthfi also confirmed that the energy and mineral resources minister and the finance minister had agreed to respect the contracts made by the government and the coal companies
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