Best World

[namralk]

UPDATE OF CORPORATE INCOME TAX ASSESSMENT OF FISCAL YEAR 2008 FOR PT BEST WORLD INDONESIA (“PT BWI”)

The Board of Directors of the Company (the “Board”) refers to the Contingent Liability amounting to IDR31,361,377,029 (equivalent to S$3,205,374) (the “Disputed FY 2008 Tax Liability”) disclosed in Note 35B(a) of the Company’s 2014 annual report. This pertains to the then potential tax liability for financial year 2008 (“FY2008”) of our Indonesian subsidiary, PT BWI, which was the subject of appeal to the Indonesian Supreme Court.

PT BWI has since been informed that it was not successful in its appeal to the Indonesian Supreme Court. Following the decision of the Indonesian Supreme Court, PT BWI has to pay the full sum of the Disputed FY2008 Tax Liability.

To date, PT BWI has already paid tax instalments totaling IDR23,781,984,649 (equivalent to S$2,430,701), of which IDR21,831,984,649 (equivalent to S$2,231,397) were previously recorded as other assets in the audited consolidated balance sheet of the Company in FY2014. After deducting a tax refund of IDR201,063,000 (equivalent to S$20,550), a balance sum of IDR7,378,329,380 (equivalent to S$754,122) remains payable.

The Disputed FY2008 Tax Liability will be reflected in the Company’s FY2015 consolidated profit and loss statement and will affect the Company’s consolidated net profit for FY2015.

http://infopub.sgx.com/FileOpen/Update%2...eID=382859
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So, to date, there remains an underpayment of CIT (Corporate Income Tax) for FY2008 in Indonesia of IDR7,378,329,380 (equivalent to SGD 754,122) to be paid - which would be accounted for in FY2015.
 
If my interpretation of Note 35B (b) of AR2014 (page 105) is correct, there should be a refund of VAT to be followed. The “overpayment” of VAT as at end of 2014 amounts to IDR 7,681,705,460 (about SGD 815,000).
 
Presumably, the CIT has to be settled first before the VAT. In short, the underpayment in CIT would roughly cancel out the overpayment in VAT - but there is a timing difference.
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I read it as there was a partial payment IDR23,781,984,649  (equivalent to S$2,430,701) for CIT. Cash wise there is another IDR7,378,329,380 (equivalent to S$754,122) left to be paid.


However from P&L view for FY2015, there would be a full hit of IDR31,361,377,029 (equivalent to S$3,205,374) as the partial payment was parked under Other Assets. It is now certain it is not a retrievable asset hence it must be accounted for in P&L.

This is a 1-off event and I would not be too worried about it.