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NEWS UPDATES 19 July 2009

Foreign oil firms in Indonesia’s Batam threaten to move out 

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More than 10 oil-based companies currently operating on Batam, Riau Islands, warned they would relocate to other countries, most possibly Singapore, because they are subject to double taxation, reported the Jakarta Post.

The chairman of the Batam Industrial Estate Association, Oka Simatupang, said Thursday oil-based companies based in Batam’s Free Trade Zone status had to pay double taxes for the same product: when the product left the port of origin from Indonesia to Batam and when the product left the island after being processed.

The tax, he said, amounted to 10 percent, but it meant a lot for oil base companies having to pay it twice each time.

"These oil-base companies are facing double taxation. Many companies have complained to us, and some of them said they would rather move to Singapore," Simatupang told Antara news agency.

Simatupang, who is also general manager of Kabil Industrial Estate (KIE) on Batam, said five companies based in KIE had told him they would relocate to Singapore.

In Singapore, he said, value added tax is imposed only once, which is much more attractive for these companies.

Therefore, he suggested the government subject oil-base companies to the regular value added tax law rather than the Free Trade Zone rules.



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