House approves tax tribunal bill; new system to settle tax disputes
House approves tax tribunal bill; new system to settle tax disputes
Dadan Wijaksana, The Jakarta Post, Jakarta
All ten factions of the House of Representatives approved a draft
law providing for the establishment of a new tax tribunal on
Wednesday during a plenary session, sparking hopes of a better
and more equitable system for the settlement of tax disputes.
When enacted into law, the bill, which was first proposed by
the government in October 2000, will serve as the legal basis for
the establishment of an independent tax tribunal to replace the
existing institution, known as the tax disputes settlement agency
(BPSP), which comes under the authority of the finance ministry.
The House and the government agreed that Law No.17/1997 on
taxation, the legal basis for the BPSP, still contained
loopholes, thus leading to legal uncertainty and a lack of equity
for taxpayers and losses to the state.
Under the present BPSP system, reports of unfair settlements
in tax disputes have been rife, with taxpayers mostly ending up
on the losing side due to their weak bargaining position.
On the other hand, closed-door deals in settling tax disputes
could also result in financial losses for the state.
Minister of Finance Boediono stressed the importance of the
House's approval for the bill, as it would mark far-reaching
progress, especially as regards transparency.
"The new law will require proceedings in the tax tribunal to
be open to the public, so that everyone can see what's going on,"
Boediono said after attending the meeting.
The current regulations require that cases involving tax
disputes be heard in camera, with the possibility of unlawful
deals between taxpayers and officials being ever present.
There have been complaints that both taxpayers and BPSP
officials are not averse to respectively offering and accepting
bribes for personal gain and at the expense of the state.
With the country pushing hard in its efforts to maximize
revenue from taxes, corruption within the tax system constitutes
a major problem.
Since the government has been running out of fresh funding
sources to finance the state budget, tax collection has become
the prime contributor to the budget's revenue side.
The tax tribunal would sit under the supervision of the State
Administrative Court (PTUN).
Legislators agreed on the urgency of the new law to avoid
further losses to the state and educate officials and taxpayers
to act in accordance with the law.
"That's why we need this institution, which is to designed to
provide a bridge between the interests of both taxpayers and the
government.
"On the one hand, the government wants to increase revenue
from taxes but at the same time also wants to improve the level
of protection for taxpayers," Hatta Taliwang of the Reform
faction told the meeting.
Under the bill, decisions issued by the new tribunal would be
final and binding.
An appeal would, however, be allowed straight to the Supreme
Court.
Such a review could only be undertaken once and only after the
party involved had paid 50 percent of his outstanding taxes as
determined by the tribunal.
This should provide more protection for taxpayers given that
under the old law, an appeal could only be brought after 100
percent of outstanding taxes had been paid to the state.