Deputy Minister of Law and Human Rights Edward Omar Sharif Hiariej representing the Government at the material judicial review hearing of Law No. 7 of 2021 on the Harmonization of Taxation Regulations, Tuesday (10/3/2023). Photo by MKRI/Ifa.

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JAKARTA (MKRI) — The provision of Article 43A paragraph (4) of Law No. 7 of 2021 on the Harmonization of Taxation Regulations (HPP Law) is intended to limit the authority of tax officers who are given a warrant when conducting an examination of preliminary evidence. Meanwhile, the Finance Ministry Regulation (PMK) No. 177/PMK.03/2022 was enacted to regulate the management and procedure of preliminary evidence examination, as well as to implement the principles of good governance.

This statement was made by Deputy Minister of Law and Human Rights Edward Omar Sharif Hiariej as the President/Government’s proxy at the material judicial review hearing of the HPP Law in the Constitutional Court (MK) on Tuesday, October 3, 2023.

In response to the petition, the President/Government declared that the control mechanism in the examination of preliminary evidence starts when a taxpayer agrees to or rejects the examination. In contrast to investigators’ authority to confiscate evidence during investigation, during the examination of preliminary evidence, only taxpayer data and documents required to determine the existence or absence of a criminal event can be borrowed.

Furthermore, Eddy Hiariej said that philosophically, the examination of preliminary evidence in the HPP Law is an application of the sunrise principle, where in the event of an alleged criminal offense, the Directorate-General of Taxation (DJP), who has the authority to examine preliminary evidence, can look for and collect evidence to justify a criminal offense. If such evidence is discovered, the next process will be inquiry. This is done to prevent further losses of the state’s finances.

“On the other hand, if preliminary evidence examination results in insufficient evidence, the investigation into the case must halt immediately. This is stipulated in Article 24 paragraph (2) of PMK No. 177/PMK.03/2022. The case termination after the preliminary evidence examination is an application of the sunset principle, which aims to protect human rights,” he said before Chief Justice Anwar Usman, Deputy Chief Justice Saldi Isra, and the other seven constitutional justices.

Not Within Pro Justitia

Meanwhile, Eddy Hiariej noted that the preliminary evidence examination has the same objective and position as the inquiry in the criminal justice procedure in general, which is a series of investigators’ actions to search and find an event suspected of being a criminal offense in order to determine whether or not an investigation can be carried out. It means that there is no coercion, as in pro justitia, because there is no justification for a criminal offense. As a logical consequence of a preliminary evidence examination being equal to an inquiry, pretrial cannot be undertaken.

“Thus, borrowing evidence in a preliminary evidence examination differs greatly from search and seizure in an inquiry as envisaged by the Criminal Procedure Code (KUHAP). The absence of search and seizure in the process is because it is equated to investigation, as demonstrated in several pretrial cases. It needs to be reaffirmed that the preliminary evidence examination is a mandate of legislation in taxation that has not entered investigation and there is no coercion as in the realm of pro justitia,” said Eddy Hiariej.

Also read: 

Taxpayer Questions Procedure to Examine Preliminary Evidence of Tax Crimes

Legal Entity Becomes Petitioner in Case on Preliminary Evidence of Tax Crimes

The case No. 83/PUU-XXI/2023 was filed by Surianingsih and PT Putra Indah Jaya. They challenge the amendment to Article 43A paragraph (1) in Article 2 point 13 on the HPP Law along the phrase “an examination of the preliminary evidence prior to a criminal investigation” and the amendment to Article 43A paragraph (4) in Article 2 point 13 on the HPP Law along the phrase “Procedures for examination of preliminary evidence of criminal offense in the field of taxation.”

Article 43A paragraph (1) of the HPP Law reads, “Based on information, data, reports, and complaints, the Director General of Taxation shall be authorized to conduct an examination of the preliminary evidence prior to a criminal investigation in the field of taxation.”

Article 43A paragraph (4) of the HPP Law reads, “Procedures for examination of preliminary evidence of criminal offense in the field of taxation as referred to in paragraph (1) and paragraph (2) shall be regulated by or based on the Regulation of the Minister of Finance.”

At the preliminary hearing on Monday, August 28, legal counsel Cuaca said those articles were in violation of Article 1 paragraph (3) and Article 28D paragraph (1) of the 1945 Constitution. He revealed a concrete case where in an examination of preliminary evidence of a tax crime, the house of Petitioner I was sealed off and searched by civil service investigators (PPNS), which could not be challenged through pretrial in both the district court and the state administrative court (PTUN). This is because the letters issued for preliminary evidence examination are related to criminal law enforcement, which are not within the state administrative court’s jurisdiction.

The Petitioners believe this to be a reflection of legal imbalance and lack of protection of human rights for taxpayers who is examined for preliminary evidence of tax crimes. In addition, there are different court rulings on pretrial motions relating to the examination of preliminary evidence of tax crimes.

In the petitum, the Petitioners request that the Court declare the phrase “examination of the preliminary evidence prior to a criminal investigation” in the amendment to Article 43A paragraph (1) in Article 2 point 13 on the HPP Law conditionally unconstitutional and not legally binding if not interpreted as “To the following acts during the examination of the preliminary evidence of criminal offenses in taxation:”

a. borrowing and inspecting books or records, documents that are the basis of bookkeeping or recording, and other documents related to income earned, business activities, personal service by taxpayers, or taxable objects;

b. accessing and/or downloading data, information, and evidence managed electronically;

c. entering and inspecting certain places or rooms, movable and/or immovable property suspected or reasonably suspected of being used to store books or records, documents that form the basis for bookkeeping or recording, other documents, money, and/or goods that can provide clues about income earned, business activities, personal service by taxpayers, or taxable objects;

d. sealing certain places or rooms as well as movable and/or immovable goods;

a pretrial motion to the District Court may be filed.”

The Petitioners also request that the Court declare the clause “Procedures for examination of preliminary evidence of criminal offense” in the amendment to Article 43A paragraph (1) in Article 2 point 13 on the HPP Law unconstitutional and not legally binding if not interpreted as “only relating to technical-administrative matters and not limitation and/or expansion of the rights and obligations of citizens.”

Author       : Sri Pujianti
Editor        : Nur R.
PR            : Andhini S.F.
Translator  : Nyi Mas Laras Nur Inten Kemalasari/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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