The petition revision hearing of the material judicial review of the Law on the Harmonization of Taxation Regulations, Tuesday (7/25/2023). Photo by Humas MK/Ilham W. M.

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JAKARTA (MKRI) — The Constitutional Court (MK) held another hearing for the material judicial review of Law No. 7 of 2021 on the Harmonization of Taxation Regulations (HPP Law) on Tuesday, July 25, 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.”

Before the panel chaired by Constitutional Justice Daniel Yusmic P. Foekh, the Petitioners, who attended the hearing on-site, said he had affirmed his legal standing by submitting a certificate of past employment and his tax identification number (NPWP). “This is because the NPWP reflects my status as a tax subject, and the certificate of past employment reflects that I could potentially suffer work loss because of the article,” he explained.

He had also revised the explanation to the phrase “compensation in the form of the use of facilities and/or services.” “We can see that the explanation was also strengthened in Article 4 paragraph (1), Article 4 where it was explained there are things that are not categorized as tax objects of benefit in kind. One of them is health facilities and treatment costs. It is such a sham that health facilities and treatment costs are part of taxable income,” he said.

Also read: Private Employee Questions Taxable Health Facilities

At the preliminary hearing on Monday, July 10, he said 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. 

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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