The Government’s experts taking oath before the constitutional justices before the testifying at a judicial review hearing of the Law on Financial Relations between Central-Regional Governments, Tuesday (2/27/2024). Photo by MKRI/Ifa.
JAKARTA (MKRI) — The Constitutional Court (MK) held another hearing of the petition filed by notary Budi Wibowo Halim on Tuesday, February 27, 2024. The material judicial review hearing Article 44 paragraph (2) letter a point 7 and Article 49 letters a, b, and c of Law No. 1 of 2022 on Financial Relations Between the Central and Regional Governments (HKPD Law) in the plenary courtroom was presided over by Chief Justice Suhartoyo, Deputy Chief Justice Saldi Isra, and the other constitutional justices.
The hearing for case No. 117/PUU-XXI/2023 presented testimonies by two experts for the President/Government: professor at the Faculty of Economics and Business of Tanjungpura University Eddy Suratman and advisor for the DKI Jakarta Provincial Government’s Regional Revenue Agency Eddy Supriadhi.
Eddy Suratman said one of the key goals of the HKPD Law is increasing local taxing power, particularly to accelerate the increase in fiscal independence of regency governments. Based on the results of simulation by the Finance Ministry’s Directorate General of Fiscal Balance (DJPK), in the implementation of the HKPD Law, regency governments will experience the highest increase in local revenues (PAD), which will contribute greatly to increasing their fiscal independence in the form of levy for acquiring land and building rights (BPHTB).
Suratman acknowledged that BPHTB is also one of the most potential local taxes in the regency. The large contribution of BPHTB is due to the implementation of the regulatory substance of Article 44 paragraph (2) letter a point 7 of the HKPD Law. Local governments have recognized this since the enactment of Article 2 paragraph (2) letter a point 7 of Law No. 20 of 2000 on BPHTB. So far, Suratman continued, the implementation of the substance of Article 44 paragraph (2) letter a point 7 Law No. 1 of 2022 is regulated in Article 2 paragraph (2) letter a point 7 of Law No. 20 of 2000 and Article 85 paragraph (2) letter a point 7 of Law No. 28 of 2009.
“The contribution of BPHTB can actually still be increased if we are able to close the gaps due to the weaknesses of existing arrangements, which seem to have created a legal vacuum. Thus, if the Petitioner’s argument on the definition of separation of rights resulting in a transfer is accepted, the result will be a transfer of rights that are not subject to BPHTB, thereby reducing the BPHTB base and BPHTB revenue is likely to decrease. Furthermore, if the Petitioner’s argument related to the time when BPHTB is payable cannot be determined on the date the sale and purchase binding agreement (PPJB) is made and signed but after the issuance of the sale and purchase deed (AJB), then the issue of legal vacuum remains, which taxpayers (WP) can use to avoid BPHTB, leading to a decrease in BPHTB revenue,” he said before Chief Justice Suhartoyo and the other constitutional justices.
State Administration System
Meanwhile, Eddy Supriadhi revealed that Law No. 20 of 2011, Government Regulation (PP) No. 34 of 2016, Government Regulation No. 35 of 2023, and Government Regulation No. 18 of 2021 showed the implementation of PPJB as the Government’s presence on practices prevailing in society that must be protected and recorded in the state administration system. He said that PPJB is an economic activity that causes a transfer of wealth, an increase in ability and social status, as well as the utilization and/or control of land/buildings that provide economic and social benefits. Thus, its direct contribution is in the form of taxes, both income tax (PPh) and BPHTB. In practice, he added, PPJB can be made either in the presence of a notary or without one. Although PPJB is made without a notary, this does not degrade its value as a legal act according to the law.
“Although not all legal acts of sale and purchase are preceded by PPJB, the Government has regulated it in Government Regulation No. 35 of 2023, Article 18 paragraph (3) regulates the options that can be utilized by the public, whether to immediately make AJB or first make PPJB. If within a few years after the PPJB is made (with BPHTB payment) the taxpayer signs a sale and purchase deed, they are not subject to BPHTB again, as long as there are no changes that result in the amount of payable BPHTB. Thus, the application of this norm does not cause double tax burden and does not violate the citizens’ constitutional rights,” Supriadhi explained.
Also read:
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Govt: HKPD Law Simplifies Regional Taxation and Retribution System
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At the preliminary hearing on Wednesday, October 4, the Petitioner revealed that he was one of inheritors based on the inheritance deed No. 06/2021 dated April 5, 2021 but had not yet listed the transfer of right to the local land office because he could not afford the duty on acquisition of land and building (BPHTB) for the inheritance yet. Thus, he believes he could suffer constitutional loss due to Article 44 paragraph (2) letter a number 7 and Article 49 letter b of the HKPD Law, which regulates the tax on acquired land and/or building originating from the separation of rights that results in transfer or rights.
Meanwhile, the separation and division of inheritance from all inheritors to one or more (not all) is not a form of transfer of rights, so it is not included as part of BPHTB payable. This has created legal uncertainty for the Petitioner in the imposition of BPHTB tax because it is subject to BPHTB for the separation and division of inheritance which should not be BPHTB. The Petitioner should only be subject to inheritance BPHTB, but because Article 44 paragraph (2) letter a point 7 and Article 49 letter b of the HKPD Law are unclear, he could potentially be subject to inheritance BPHTB and right separation BPHTB, which results in the transfer of rights. As a result, there is no basis for the amount of tax, thus creating problem for the inheritors.
“The Petitioner’s constitutional loss would not happen if the Court declare the word ‘bequests’ in Article 49 letter b of the HKPD Law unconstitutional and not legally binding and must be interpreted as ‘for bequests, on the date the transfer of rights is registered to the land office,’” said the Petitioner on site from the plenary courtroom.
Author : Sri Pujianti
Editor : Nur R.
PR : Raisa Ayuditha Marsaulina
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.
Tuesday, February 27, 2024 | 16:01 WIB 202