'Equality essential' in new tax law

Urip Hudiono, The Jakarta Post, Jakarta

Proposed amendments to the tax law must underline the principle of equality between taxpayers and tax officials, says a consultant association, an issue that has been at the center of public objections to the tax reform bills.

Implementing such a principle, the Indonesian Tax Consultants Association (IKPI) said on Wednesday, could be done through equally strict sanctions against both tax officials and taxpayers violating any procedures.

Any disputes arising in assessment should also be resolved through a tax court that is separate from the tax office.

IKPI chairman Tjoetjoe Alihartono said that the new tax laws must consistently implement the "self-assessment" principle Indonesia uses in its taxation system -- in which taxpayers calculate by themselves the amount of taxes owed to the state -- with tax officials having at first a "positive disposition" towards any submitted tax forms.

"Even if a tax official then sets an amount different from a taxpayer's submitted form, they must provide hard evidence of their calculations, and not just base it on mere assumptions and findings," he said in a hearing with the House of Representatives' tax laws deliberation team.

"Any objection from taxpayers should also be considered by a review team consisting of the tax official's superiors."

And should the differing opinion between the taxpayer and tax officials drag on, the matter must then be heard and settled through a tax court, with stern sanctions against the guilty party.

"If the court's verdict is in favor to the taxpayers, the tax official must then be sanctioned if they have caused losses to the taxpayer," Tjoetjoe said, suggesting an expansion of the stipulation in the current tax laws, which imposes sanctions on tax officials only if they are proven to have caused losses to the state.

"Taxpayers should also be sanctioned if the verdict is against them, for example, by paying a high fine in addition to their owed taxes, to deter cases of reckless complaints to the tax court."

To ensure the court's independence, IKPI suggested that it be established outside of the tax office, and for the public's convenience, be available in every provincial capital, with a court of appeals in the capital, and the Supreme Court settling final appeals.

IKIP also suggested the scrapping of the current stipulation of taxpayers having to pay 50 percent of their owed taxes before being heard by the tax court, as it does not reflect a sense of justice.

"The freezing of taxpayers' bank accounts or assets can only be done up to the amount of their tax arrears, as more than that is considered unfair to taxpayers and hurts the business climate," the association said.

Tjoetjoe also highlighted the importance of implementing a new tax amnesty law with the tax law amendments, to give the tax reform effort a better chance of achieving its goal of creating a larger tax base.

IKPI is among several parties that the House will hear in their deliberation of the amendment bills.

Others include former finance ministers and tax office chiefs, as well as the Indonesian Chamber of Commerce (Kadin), which has openly argued that the bills would hurt Indonesia's investment climate if they still retained their many stipulations considered unfriendly to businesses.

The deliberation team will hold hearings until the House enters its next recess period on Dec. 9.