Court to run Tax Tribunal

Rendi A. Witular, Jakarta

The Ministry of Finance agreed on Monday to transfer the administration and supervision of the Tax Tribunal to the Supreme Court at a Constitutional Court hearing, following the enforcement of Law No. 4/2004 on judicial authority and Law No. 5/2004 on the Supreme Court, which reinstated a single court system.

Under the single court system, appeals on Tax Tribunal rulings can be filed with the Supreme Court.

"We are currently in the process of preparing the transfer of the Tax Tribunal from the Ministry of Finance to the Supreme Court, as required by the laws," said Minister of Finance Boediono to Constitutional Court justices.

At present, the finance ministry is handling the administration, finances and cases of the Tax Tribunal -- including the salaries, promotions and rotation of the tribunal's judges -- which has given rise to accusations that the ministry was influencing the tribunal's rulings.

Boediono declined to elaborate on the preparations necessary for the transferal, saying only that any decisions would be dependent on developments with the Constitutional Court.

Director General of Laws and Regulations Abdul Gani said the Tax Tribunal, along with the Military Tribunal, were the only courts that had yet to be placed under the Supreme Court, as the government needed some time to prepare their transferal.

"The transfers will be conducted soon. Under the Supreme Court, the Tax Tribunal will fall under the Special State Administrative Courts," said Abdul.

The move comes amid sharp criticism from the business community against the Tax Tribunal, which is seen as a tool by which the government can extort taxpayers. Verdicts handed down by the tribunal are final, and a party seeking to file a petition with the tribunal over a tax dispute cannot do so unless it pays 50 percent of the disputed arrears.

Taxpayers are thus usually reluctant to file a case with the tribunal, and those who are unable to meet the 50 percent arrears payment have no alternative but to seek a compromise with tax officials, including paying bribes.

Businessman BQ Vega filed in May a petition with the Constitutional Court because of the controversies surrounding the tribunal, claiming the tribunal's establishment and existence was unconstitutional, and that it had been abused by tax officials to extort taxpayers.

Vega demanded the Constitutional Court to declare Law No. 14/2002 on the Tax Tribunal invalid, and that the government abolish the Tax Tribunal.

The tribunal was established in 2002 to replace the finance ministry's Tax Dispute Settlement Agency (BPSP).

In response to the charges, Boediono, accompanied by Director General of Taxation Hadi Purnomo, said at the hearing that the 50 percent requirement was necessary to ensure the inflow of state revenue from taxes.

"The 50 percent requirement was approved by the House of Representatives during the deliberation of the Tax Tribunal Law in 2002 ... (the requirement) is for the sake of the public, not individuals," said Boediono.

The Court adjourned the hearing until further notice to hear testimony from witnesses.