Bill promises taxpayer protection

Ary Hermawan, The Jakarta Post, Jakarta

The House of Representatives and the government promised the bill for general taxation arrangements and procedures, which was agreed to by a special committee last week, would guarantee equality between taxpayers and the tax office.

"The basic principle of the amendment to the 2000 law on general taxation arrangements and procedures is that we want to provide equality between taxpayers and tax officials," committee head Melchias Markus Mekeng told The Jakarta Post on Sunday.

He said the bill provided greater legal power for taxpayers, while tax officials would be subject to criminal charges if they breached regulations in performing their jobs.

"There are currently almost no protections for taxpayers. The bill provides them with greater protection, and that's what makes it business friendly."

After a long debate, all factions in the House and the Finance Ministry agreed last Thursday to end the impasse over three articles in the bill, which was first submitted in late 2005.

Among the contentious issues is the procedure for filing objections to tax assessments by the tax office, as provided for under Article 25 of the bill.

The committee, Melchias said, agreed that when filing challenges with the tax tribunal, taxpayers could pay the amount they believed they owed according to their own calculations.

Under existing regulations, taxpayers must pay 50 percent of the amount of tax calculated by the tax office before filing an objection.

Should the taxpayer's challenge be partially or fully rejected by the tribunal, he or she must pay a fine of 50 percent of the total amount of tax owed as ruled by the court. That fine increases to 100 percent if the taxpayer appeals the decision and loses.

"With this passage, businesses now have a legal basis to defend their rights," Melchias said.

The Finance Ministry's director general for taxation, Darmin Nasution, said the regulation would not lead to a retrenchment in tax revenue, despite fears many people would file tax assessment objections to delay tax payments.

"There will likely be a suspension in tax payments, but not a cutback in revenue. Taxpayers must also realize that the fine is quite big if they eventually lose the dispute."

Melchias said the bill also called for the establishment of a taxation supervisory agency under the Finance Ministry to oversee the tax service.

A lawmaker from the Prosperous Justice Party (PKS), Andi Rahmat, said while ensuring that the rights of taxpayers were protected, the bill also specifically empowered the tax service to increase state revenue.

Under the bill, eligible taxpayers would be obligated to register with the tax office or face sanctions.

The bill is now expected to be passed by a plenary session of the House. Once enacted, it will serve as the basis for the amendment of two other tax laws -- the 2000 Income Tax Law and the 2000 Value-added Tax and Luxury Sales Tax Law.

Taxpayer protections in bill

1. People can file objections over a tax assessment without having to pay 50 percent of the amount of tax determined by the tax office
2. The creation of a taxation supervisory agency to oversee tax officials
3. Tax officials can face fines of up to Rp 50 million (US$5,600) or up to a year in prison for releasing confidential taxpayer information
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