ADDITIONAL INFORMATION
49. ADDITIONAL INFORMATION
a. As of December 31, 2008 and 2007, the Bank's capital adequacy ratios were 12.66% and 12.44% , respectively.
b. As of December 31, 2008 and 2007, the Bank's non-performing earning assets (gross) to total earning assets ratios were 0.95 and 0.95, respectively.
c. The ratios of non-performing receivables and financing (gross) to total receivables and financing as of December 31, 2008 and 2007 were 5.66% and 5.64% , respectively.
d. Based on the Bank's Legal Lending Limit (LLL) report to Bank Indonesia as of December 31, 2008 and 2007, there were no receivables, loans and financing facilities, which did not comply with the legal lending requirements.
e. Value Added Tax (VAT) Issues of Murabahah Financing In 2004 and 2005 the Banks Head Office and Branch Offices received Tax Underpayment
Statement (SKPKB) and Tax Collection Notice (STP) for Value Added Tax (VAT) for the period of January up to December 2003 from the General Directorate of Tax with total amount pf Rp 37,649,329, due to the fact that the Bank in its performing its function as intermediary had distributed fund based on sharia principles in the form of Murabahah Financing. The SKPBK and STP include : head office in Jakarta of Rp 25,542,432, branch office in Jambi of Rp 1,588,713, branch office in Bandar Lampung of Rp 2,377,922, and branch office in Pekalongan of Rp 2,309,495.
Regarding the SKPKB and STP, the Bank refused to make payments considering that there was an issue of tax law status of the Murabahah Financing transaction. The applicable tax law at the time has not specifically and explicitly govern the operation of sharia Banks, especially regarding Murabahah Financing; therefore, further interpretation was required.
In the Bank’s Management’s opinion, Murabahah Financing is a banking service as described in Law No. 7 of 1992 regarding Banking, which was amended through Lawa No. 10 of 1998 and No. 21 of 2008 regarding Sharia Banking. Consequently, Murabahah Financing is excluded from VAT subject. This is in compliance with Law No. 8 of 1983, which was amended through Law No.18 of 2000 regarding VAT of Goods and Services and Sales of Luxury Goods.
The General Directorate of Tax believes that a Murabahah transaction conducted by the Bank is subject to VAT due to the fact that the activity is conducted based on the principle of sale and purchase of goods, and a Murabahah transaction excludes services in banking.
In its effort to settle the issue regarding tax treatment on Murabahah Financing transaction, the Bank has establish discussions with Asbisindo, Perbanas, National Sharia Board, Bank Indonesia and General Directorate of Tax and Secretary Deputy of Vice President of the Republic of Indonesia for Economic Affairs. In addition to that, on January 8, 2008 in its effort to settle the issue, the Bank held another meeting with Abisindo, Directorate of Sharia Banking of Bank Indonesia, Governor of Bank Indonesia and Vice President of the Republic of Indonesia.
Meanwhile, Bank Indonesia through its letter No. 10/1421/DPbS dated November 19, 2008 regarding the development of Murabahah VAT delivered information that at the moment Tax Policy Board and General Directorate of Tax are preparing guidelines regarding VAT on Sharia Banking.
The Bank continuously makes effort to settle issue regarding VAT on Murabahah Financing transaction with related parties; however, until the audit was completed the discussion is still in progress and no decision has been made.
In relation with the end result of issue regarding issues of VAT on Murabahah Financing transaction, no decision has been made and the amount of potential loss has not been estimated reliably; therefore, the Bank has not made any reserves on the SKPKB and SPT for the period of January up to December 2003.
f. Contingency of Legal Claim On February 5, 2008 the Bank received a letter from Board of Sharia Arbitration of Indonesia
(BASYARNAS) confirming whether or not there is a legal claim regarding mudharabah muqayyadah channeling from Shahibul Maal (fund owner) as the supplicant to the Bank as the Facilitator (Booking Office)/supplicated I and Customer as Mudharib/supplicated II.
As the result from the legal session, on August 21, 2008, the Arbitration Council of Basyarnas decided, among others, that supplicated I and supplicated II must pay to supplicant in the amount of Rp 10,000,000 as joint liability. The Bank appealed against the decision of the Arbitration Council of Basyarnas to the Registrar of State Court of Central Jakarta and Karawang on September 26, 2008 with case numbers No. 169/PDT.P/2008/PN.JKT.PST and No. 29/PDT.P/2008/PN.Krw., respectively.
Based on the Circular Letter of Supreme Court (SEMA) No. 8 of 2008 dated October 10, 2008, it is stated that “If the decision of BASYARNAS that has legal power and is binding is not executed voluntarily, then the execution may be conducted by the Religion Court in the area of residence of the supplicated. The supplicant has filed a request for execution through State Court of Central Jakarta, and the State Court of Central Jakarta has transferred the case to Religion Court of Central Jakarta. On the transfer of the case, the Bank has filed objection to the execution to the Religion Court of Central Jakarta. To cover the operational risk, Bank has made allowance for possible loss in the amount of Rp 11,500,000 ( see Note 21).