The preliminary hearing of the material judicial review of the Law on the Harmonization of Taxation Regulations, Monday (7/10/2023). Photo by Humas MK/Ifa.

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JAKARTA (MKRI) — The Constitutional Court (MK) held a preliminary hearing for the material judicial review of Law No. 7 of 2021 on the Harmonization of Taxation Regulations (HPP Law) on Monday, July 10, 2023 in the plenary courtroom. The petition No. 67/PUU-XXI/2023 was filed by Leonardo Siahaan, a private employee.

The Petitioner challenges Article 4 paragraph (1) letter a of the HPP Law, which reads, “The object of tax shall be income, which is any additional economic capacity received or obtained by the Taxpayer, whether originating from Indonesia or outside Indonesia, which can be used for consumption or to increase the wealth of the Taxpayer in question, in any name and form, including: a. reimbursement or compensation in connection with work or services received or obtained including salaries, wages, allowances, honoraria, commissions, bonuses, gratuities, pensions, or compensation in other forms including benefit in kind and/or benefit, unless otherwise specified in this Law.”

On site at the hearing chaired by Constitutional Justice Daniel Yusmic P. Foekh, the Petitioner argued that health facilities and medical expenses have been insured by the company. Previously, they had been the responsibility of the company and employees did not pay any tax for it and had not been categorized as a taxable object.

He asserted that paying for such tax would put a burden on his finances. He also said that health facilities and medical expenses are an employee’s right, but now are taxable.

“The issue is that it was not a taxable object, but now is. Please imagine, Your Honors, for example my salary is two million, then it is cut for health facilities and medical expenses. This cut would harm me, as it might cut my salary from two million to just one million. It is ironic and takes away the rights of employees,” he explained.

The Petitioner questioned why health facilities and medical expenses are objects of income tax. “We know what the objects of income tax are. There is no connection to health facilities and medical expenses. I don’t understand why the Government made health facilities [and medical expenses] taxable,” he stressed.

Justices’ Advice

In response, Constitutional Justice Enny Nurbaningsih said the Law is part of an omnibus law, so its mention must be more precise.

“Please observe Court decisions on how to mention this Law. If you say the object is Article 4 paragraph (1) letter a of Law No. 7 of 2021, it is everywhere. In this context, you wrote Article 4 paragraph (1) letter a in Article 3 paragraph (1) of the Income Tax Law as amended by Law No. 7 of 2021,” she said.

She also requested that the Petitioner stress the review of the elucidation to the Law. “Affirm which elucidation you’d like reviewed, since the elucidation is very long,” she added.

Similarly, Constitutional Justice Daniel Yusmic P. Foekh highlighted the mention of the omnibus law. “If you write it this way, it will be obscure since it doesn’t match the object [of the petition]. Please adjust,” he said.

Before adjourning the session, Justice Foekh announced that the Petitioner had 14 workdays to revise the petition and to submit it to the Registrar’s Office by Monday, July 24 at 10:00 WIB. 

Author       : Utami Argawati
Editor        : Nur R.
PR            : Fitri Y.
Translator  : Yuniar Widiastuti (NL)

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.

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