Mar'ie defends power for tax investigations

JAKARTA (JP): Minister of Finance Mar'ie Muhammad yesterday defended the government's proposal to equip the tax directorate general with the power to investigate taxpayers suspected of tax evasion or other possible violations.

The minister said that investigational power is essential to enable tax officials to collect reliable data and information related to tax crimes.

He said in a hearing with a special team established by the House of Representatives (DPR) to deliberate four tax bills that the investigational power stated in article 44 of the tax bill on tax provisions and procedures will not conflict with the code of criminal procedures where investigational power is given only to the police.

"The tax office is allowed only to investigate cases related to tax crimes," he said in his response to team members' questions about the government's plan to give the tax office investigational power.

According to the Armed Forces (ABRI) faction, giving tax officials investigational power would be counterproductive because such a task, under the existing laws, should be handled by the police.

The minister, however, argued that allowing tax officials to investigate criminal cases related to tax evasion will be more effective as they generally have better knowledge about taxation.

The Moslem-dominated PPP and the Indonesian Democratic Party (PDI) factions also questioned the government's proposal to empower the tax director general to stop investigations on tax crimes. An investigation on a criminal case can be ordered and stopped only by the Attorney General under the existing code of criminal procedures.

Limited

The minister of finance said that the power given to the director general to order an end of an investigation on tax- related crimes is limited only to such cases when taxpayers have admitted their impropriety or they have settled their tax payments.

The bill on the tax provisions and procedures is one of the four tax drafts now being deliberated by the team. The other three bills cover income tax, value added tax (VAT) and land and building (property) tax.

The bill on the tax provisions and procedures also seeks the establishment of a tax court as an independent tax arbitrator to settle tax disputes between taxpayers and the government.

Tax dispute settlement is at present handled by the Tax Advisory Council comprising of senior tax officials, senior officials of the Supreme Court and members of the Indonesian Chamber of Commerce and Industry (Kadin). The council is the only tax arbitrator in the country.

Mar'ie said that the proposed tax court will have branches in provinces so that tax disputes can be settled quickly.(hen)