sharing in governance of extractive industries

Beneficial Ownership Transparency, State Revenue, and EITI

Entitled “Beneficial Ownership Transparency, State Revenue, and EITI”, the policy brief captures how the absence of beneficial ownership transparency affect Indonesia state revenue in massive way. And the current initiative, EITI, aims to address the gap by promoting beneficial ownership in the extractive industries. 

Approximately IDR 1,387 trillion (at least $100 billion) financial benefit flew from oil, gas, mineral and coal sector that were enjoyed by thousand of corporate (Badan Pusat Statistik, 2014 & Bank Indonesia, 2014). However, only IDR 96.9 trillion (at least $7 billion) that are taxable (Direktorat Jenderal Pajak, 2014) due to absence of accurate information on beneficial ownership in the mining sector.

Although, there are hundreds of extractive companies operate in Indonesia, public never really know who controls and receive main benefit these companies(or called a beneficial ownership). According to Indonesian Bureau of Statistic (BPS) and Bank of Indonesia (BI), in 2014, Gross Domestic Product (GDP) in mining sector, both downstream and upstream, reached $100 billion (BPS, 2014 & BI, 2014). Undeniably, with such economic values, mining sector attracts lots of companies and business to invest in Indonesia.

Despite creating gigantic financial value for companies, total tax that is paid to state account is still very small. Directorate General of Tax (DJP) reported that mining sector only contribute about $7 billion of tax revenue resulted in 9.4% ratio of tax revenue and GDP of mining sector.

The policy brief can be accessed online in http://pwyp-indonesia.org/en/193217/beneficial-ownership-transparen...

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