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Tax Directorate General’s tax regulation director Irawan delivered Government’s testimony in judicial review session of Tax General Regulations and Procedures Act (UU KUP), on Wednesday (13/4) in Plenary Room, the Constitutional Court Building. Photo PR/Ganie

 

 

 

Value-added tax shall be levied by entrepreneur since Finance Ministry has stipulated regulation on business gross income, Tax Directorate General’s tax regulation director Irawan delivered Government’s testimony in judicial review session of Tax General Regulations and Procedures Act (UU KUP), on Wednesday (13/4) in Plenary Room, the Constitutional Court Building.

In the session of Case No. 13/PUU-XIV/2016, Irawan delivered the testimony in response to Edi Pramono’s petition concerning Article 2 (4) and (4a) Tax General Regulations and Procedures Act. As known, Edi who run building construction material business considers his rights harmed by the Articles.

The Articles regulate retroactive tax obligation for taxable entrepreneurs (PKP); tax obligation is also applied for past years before the entrepreneurs registered as taxable entrepreneur. Edi argues the Articles harm his constitutional rights, among others are protection right, and fair legal certainty.

By the regulation, Tax Directorate General issued statute that determines the Applicant (Edi) charged with retroactive tax obligation amounted to 623 million Rupiahs/month. In total, the Applicant charged with value-added tax obligation amounted to 1 billion Rupiahs.

In previous sessions, the Applicant argued that he never added value-added tax on his construction goods before determined as taxable entrepreneur. Due to it, he argued that the tax was burdened to him, not to his consumers.

In Wednesday’s session led by Chief Justice Arief Hidayat, Irawan asserted that Edi mistakenly understood the Articles. He asserted that although the Applicant had registered in 2012, but it didn’t mean the obligation started after registered.

Irawan delivered that value-added tax obligation appears in accordance with gross income. Irawan said that the Applicant will know when tax obligation started if he makes correct accounting in accordance with Article 28 (3) Act of Tax General Regulations and Procedures.

“Therefore, the conclusion is value-added tax obligation is mandated by legislation, not by taxable entrepreneur registration,” said Irwan.

According to the Government, VAT collection mechanism is in accordance with self-assessment principle; taxpayers are given trust to count and and pay their own tax.

Not A Criminal Offense

Irawan also explained that VAT collection before an entrepreneur registered as taxable entrepreneur is not considered as criminal offense, as worried by the Applicant.

Irawan explained that criminal sanction noted in Article 39 Act of Tax General Regulations and Procedures aims to avoid tax invoice abuse. The criminal sanction is imposed to entrepreneur who already issues tax invoices, but ineligible to meet subjective and objective requirements as taxable entrepreneur.

“The criminal sanction is not applied to entrepreneur who already meets subjective and objective requirements as taxable entrepreneur. Tax obligations as stated in Article 3A Act of Tax General Regulations and Procedures is applied to taxable entrepreneur who already meets subjective and objective requirements such as the Applicant. The obligations, among others, are business report and tax due using invoice,” said Irawan.

Based on argument above, the Government requested the Court to reject Applicant’s petition in its entirely.

The next session is scheduled on Thursday April 28, 2016 for hearing the House of Representatives’, Applicant’s Expert’s, and Government’s Expert’s testimonies. (Yusti Nurul Agustin/lul/Prasetyo Adi N)

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