JP/13/TAX

JP/13/TAX

Principle of equality a must: IKPI

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.