Indonesia's Bank Central Asia denies wrongdoing in decade-old tax case

JAKARTA, April 22 Tue Apr 22, 2014 5:40am EDT

JAKARTA, April 22 (Reuters) - Indonesia's PT Bank Central Asia (BCA) on Tuesday said it has adhered to all tax procedures, after the anti-corruption agency began investigating a former tax official in relation to an exemption granted to BCA around a decade ago.

The Corruption Eradication Commission (KPK) late on Monday said it is investigating outgoing audit agency chief and former director general of tax Hadi Poernomo, who granted the exemption.

BCA, the country's biggest bank by market value, was the only one of several banks to receive an exemption after filing objections to the tax office, according to local media.

"BCA has fulfilled all obligations and carried out its rights through tax procedures and steps that are correct and in line with the prevailing tax regulations," BCA Chief Executive Jahja Setiaatmadja told reporters at a briefing.

Local media recently reported the exemption cost the state 375 billion rupiah ($32.8 million).

"In our records there is no such number," Setiaatmadja said.

Shares of BCA fell as much as 2.5 percent on Tuesday, compared with the broader Jakarta Stock Exchange index, which was 0.1 percent higher.

If the tax office rescinded the exemption, BCA could face a total tax bill of 555 billion rupiah, said Maybank Kim Eng in a research note. That would amount to 3.5 percent of the brokerage's 2014 net profit forecast for BCA of 16.1 trillion rupiah.

"This might hurt sentiment in BCA stock as it creates uncertainty on how the case will evolve over time and given the high premium BCA carries versus the banking sector," the brokerage said. ($1 = 11,445 rupiah) (Reporting by Fathiyah Dahrul; Writing by Eveline Danubrata; Editing by Christopher Cushing)

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