Court to run Tax Tribunal

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.