LONG ROAD TO AN INDEPENDENT TAX COURT

LONG ROAD TO AN INDEPENDENT TAX COURT

(appreciation for the Decision of the Constitutional Court regarding the Judicial Review of Law No. 14 of 2002)

By: Tripeni Irianto Putro

The 1945 Constitution stipulates that judicial power is an independent power exercised by a Supreme Court and judicial bodies under it to administer justice in order to uphold law and justice. Meanwhile, Law no. 48 of 2009 concerning amendments to Law no. 14 of 1970 concerning Judicial Power, in article 18 states: Judicial power is exercised by a Supreme Court and judicial bodies under it within the general court environment, religious court environment, military court environment, state administrative justice environment, and by a Constitutional Court.

The meaning of “independent power” as mandated by the 1945 Constitution is that judicial power is independent from the influence of government power. Because sometimes, one might even say often, the government is involved in a dispute with citizens, such as state administration disputes and tax disputes. As for tax disputes where the parties to the dispute are taxpayers as citizens against the Directorate General of Taxes as a representative of the Government, it requires an institution that can resolve it that can be accepted by both parties. And because the government is considered to be able to influence the tax dispute settlement process so that it becomes unfair, an independent institution/organ is needed such as a court, not a “pseudo court” of a kind of objection settlement that is examined or resolved by the government agency itself, but really by the court that impartially under the jurisdiction of the Judiciary organ.

Currently, the institution that resolves tax disputes is the Tax Court. The Tax Court was formed based on Law no. 14 of 2002 concerning the Tax Court. Settlement of tax disputes before the enactment of Law no. 14 of 2002, carried out by the Tax Dispute Settlement Agency (BPSP) based on Law no. 17 of 1997 concerning the Tax Dispute Settlement Agency. However, the settlement of tax disputes through the BPSP Institution is still often felt to cause injustice, especially for justice seekers. Many still question whether this BPSP is a “judicial institution”, bearing in mind that BPSP is not under the Supreme Court as the highest institution of judicial power, but BPSP is under the auspices of the Ministry of Finance.

In the explanation of Law no. 17 of 1997 concerning the Tax Dispute Settlement Agency, it is said that the Tax Dispute Settlement Agency is a tax judiciary body that has the task of examining and deciding tax disputes, in the form of appeals against decisions of authorized officials, and lawsuits against the implementation of tax laws and regulations in the field of billing. However, this explanation still leaves the question, if indeed BPSP is a judicial body, why is its legal position not in accordance with the provisions of the 1945 Constitution and the Law on Judicial Power?

With the enactment of Law no. 14 of 2002 concerning the Tax Court, the settlement of tax disputes is now carried out by the Tax Court. The decision of the Tax Court is a final decision that already has permanent legal force, so there is no further appeal or cassation. However, taxpayers who are still dissatisfied with or object to the decision of the Tax Court can still submit extraordinary legal remedies in the form of a judicial review to the Supreme Court.

The stages of examination in the tax court which seem to be different from other justice systems such as the District Court and the State Administrative Court, especially in the implementation of legal remedies, indicate that the Government wants tax disputes to be resolved quickly, bearing in mind that taxes are a very important source of state revenue and strategic in order to finance the development of the nation and state, so that legal remedies for taxpayers who are dissatisfied with the Tax Court’s decision are only through a Judicial Review examination.

The Tax Court is a special court, like the Juvenile Court, the Commercial Court and the Fisheries Court which are under the General Courts. Meanwhile, the Tax Court itself is a special court which is now under the State Administrative Court. This special court has the authority to examine, try and decide on certain cases, and which can only be formed within one of the judicial bodies under the Supreme Court.

So far, technically the case, since the enactment of Law no. 14 of 2002 concerning the Tax Court, the Tax Court is responsible to the Supreme Court, although administratively and financially it is still under the Ministry of Finance. This situation is also a dilemma, because on the one hand the Tax Court’s decision is accountable to the Supreme Court, but from an administrative and financial perspective, salaries are still under the Ministry of Finance. This dualism of responsibility is because the Tax Court is still managed by two roofs. This also has an impact on the monitoring and coaching system. Supervision and guidance on the administration of cases is carried out by the Supreme Court, while supervision and administrative guidance are generally carried out by the Ministry of Finance.

Even though the Tax Court is now more independent than when it was still a Tax Dispute Settlement Agency (BPSP), the public still feels that the Tax Court is not fully independent. The Tax Court is not fully under the Judiciary Institution, in this case the Supreme Court. The government is still unsure about releasing the Tax Court from the executive branch, bearing in mind that taxes are the main state revenue.

In addition to concerns over tax revenues that are not optimal, the Tax Court has not been separated from the Ministry of Finance, it is also based on the special nature of the Tax Court. The Tax Court only conducts tax dispute trials. The settlement of tax disputes requires special judges who have expertise in the field of taxation. The Tax Court’s decision also contains a stipulation of the amount of tax owed by the taxpayer, in the form of a technical calculation of taxation, which not all judges can handle. So it is understandable if for the time being the recruitment of Tax Judge Judges is taken from employees or former employees of the Ministry of Finance who know more about the ins and outs of taxation.

The existence of a Constitutional Court decision which was recently knocked out on May 25, 2023, is a breath of fresh air for the world of justice in Indonesia. The Constitutional Court has decided in the case of reviewing Law no. 14 of 2002 concerning the Tax Court, which was deemed contrary to the 1945 Constitution of the Republic of Indonesia. This lawsuit was filed by 1. Nurhidayat SH, 2. Allan Fatchan Gani Wardhana SH.MH and 3. Yuniar Riza Hakiki SH.MH. The submission of this lawsuit must be seen as the spirit of Indonesian citizens and law graduates to fight for a better justice system in Indonesia, especially the Tax Court. Because the Tax Court is in direct contact with citizens, especially taxpayers who must be treated fairly and transparently.

The anxiety of the community members, especially the taxpayers, was finally answered by the Constitutional Court Decision number 26/PUU-XX/2023, which in its ruling ruled:

1. Declared that Petitioner II’s petition could not be accepted;
2. Partially granted Petitioner I and Petitioner III’s requests;
3. Declare that the phrase “Department of Finance” in Article 5 paragraph (2) of Law number 14 of 2002 concerning the Tax Court (State Gazette of the Republic of Indonesia of 2002 Number 27, Supplement to the State Gazette of the Republic of Indonesia Number 4189) is contrary to the 1945 Constitution and does not have binding legal force as long as it is not construed as “The Supreme Court which will be implemented in stages no later than December 31, 2026”, so that Article 5 paragraph (2) of Law 14/2002 reads in full, “Organizational, administrative and financial development for the Tax Court is carried out by Supreme Court which is gradually implemented no later than December 31, 2026”;
4. Order the publication of this decision in the State Gazette of the Republic of Indonesia as appropriate;
5. Rejected the petitions of Petitioner I and Petitioner III for other than and for the rest.

This Constitutional Court decision is a milestone for the judicial system in Indonesia, especially the Tax Court. The development of the Tax Court which was previously carried out under two roofs, namely that originally technically the court was carried out by the Supreme Court, but organizationally, administratively and financially it was under the Ministry of Finance, now based on the Constitutional Court decision number 26/PUU-XX/2023 it is fully under the supervision of the Ministry of Finance. under the Supreme Court. The transition period of approximately three years leading up to December 31, 2026 must be used by the Supreme Court in the best possible way, so that the transition from the Ministry of Finance to the Supreme Court can run smoothly and on time.

The government’s concern with changing the supervisory authority of the Tax Court from which was previously partly handled by the government and is now fully under the supervision of the Supreme Court must be eliminated. Concerns about the negative impact on tax revenues with the existence of an independent Tax Court under the Supreme Court are also groundless. Even with the existence of an independent Tax Court under the Supreme Court, investors both from within and outside the country and entrepreneurs who are the biggest tax contributors become more appreciative, because they expect the Tax Court’s decisions to be truly fair. So far, taxpayers who object to tax assessments and file lawsuits with the Tax Court feel that they still do not get optimal justice, the judges of the Tax Court are still considered to be less independent because they are still recruited from the Ministry of Finance who incidentally are employees or former employees of the Government who there is still doubt about its independence.

An independent tax court is a necessity. An independent court that is free from government influence will produce decisions that are fair and more acceptable to both the taxpayer as the applicant and the government, in this case the Directorate General of Taxes as the respondent.

Investors, especially investors from abroad who wish to invest in Indonesia, will certainly study how the legal system is in Indonesia, including how the tax court legal system is. Investors and Entrepreneurs want certainty in doing business, including legal certainty. They hope that if there are legal problems, including tax disputes, such as objections to tax assessments that must be paid, they will get a fair decision and get legal certainty. The existence of legal certainty and fair treatment in the settlement of tax disputes will certainly increase awareness and honesty of entrepreneurs and investors to fulfill their obligations to pay taxes to the Government. Thus it is hoped that there will be a positive correlation between legal certainty and justice in the settlement of tax disputes with increased state revenue in the tax sector, so that the long road to an independent Tax Court will not be in vain.