Petitioners attending the preliminary hearing of Case No. 186/PUU-XXIII/2025 on the material judicial review of Law No. 7 of 1983 on Income Tax as last amended by Law No. 7 of 2021 on the Harmonization of Tax Regulations, Friday (17/10). Photo by MKRI/Bay.

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JAKARTA (MKRI) – Nine private-sector employees have filed a petition for judicial review of Article 4 paragraph (1) and Article 17 of Law No. 7 of 1983 on Income Tax, as last amended by Law No. 7 of 2021 on the Harmonization of Tax Regulations (HPP Law), against the 1945 Constitution.

According to the petitioners, the provisions treat severance pay and pension benefits—which essentially constitute the normative rights of workers after decades of service—as equivalent to new income generated from economic activity.

“Private-sector retirees, who should receive empathy and protection, are treated the same as economically productive individuals. Yet constitutionally, every citizen is entitled to equal legal protection without discrimination,” said Petitioner I, Jamson Frans Gultom, during the preliminary hearing of Case No. 186/PUU‑XXIII/2025 held in Jakarta, on Friday, October 17, 2025.

Other petitioners include Agus Suwargi (Petitioner II), Budiman Setyo Wibowo (Petitioner III), Wahyuni Indrjanti (Petitioner IV), Jamil Sobir (Petitioner V), Lyan Widiya (Petitioner VI), Muhammad Anwar (Petitioner VII), Cahya Kurniawan (Petitioner VIII), and Aldha Reza Rizkiansyah (Petitioner IX).

Article 4 paragraph (1) of the Income Tax Law defines taxable income as “any additional economic capacity received or obtained by a taxpayer, whether originating from Indonesia or abroad, that can be used for consumption or to increase the taxpayer’s wealth, by any name and in any form, including salaries, wages, commission, bonuses or gratuities, pensions, or other remuneration for work performed.”

Article 17 of the same law sets progressive tax rates based on income brackets, applied to the final pay period for permanent employees, non-permanent employees earning more than IDR 2.5 million per day, non-employee income earners, activity participants, pension fund withdrawals, and former employees.

The petitioners argued that, philosophically and sociologically, severance pay and pensions cannot be equated with business profits or capital gains. They represent a worker’s final savings—the result of lifelong effort. According to the petition, the government and House of Representatives (DPR) wrongly classify severance pay received in lump sums as an “additional economic capacity,” even though such payments are savings deducted monthly from salaries and serve as recognition of service to one’s employer.

From a constitutional perspective, the petitioners contended that this policy obscures the meaning of Article 27 paragraph (2) of the 1945 Constitution. Severance pay, pensions, Old-Age Insurance (JHT), and Provident Funds (THT) form essential components of a decent livelihood; taxing them undermines workers’ constitutional right to live adequately after retirement.

In their petitum, the petitioners requested that Article 4 paragraph (1) and Article 17 of Law No. 7 of 1983 juncto the HPP Law be declared contrary to Article 28D paragraph (1) and Article 34 paragraph (2) of the 1945 Constitution and have no legal force insofar as they apply to severance pay, pensions, THT, and JHT. They also asked the Court to order the government to cease imposing taxes on all such entitlements for Indonesian citizens, whether public or private employees.

The panel hearing was presided over by Deputy Chief Justice Saldi Isra, accompanied by Justices Ridwan Mansyur and Arsul Sani. Justice Arsul advised the petitioners to refer to Constitutional Court Regulation No. 7 of 2025 on Procedures for Judicial Review of Laws (PMK No. 7of 2025), accessible via the official MK website, as a guide for preparing judicial review petitions.

“You may also refer to examples of previous petitions,” Justice Arsul added.

Before closing the session, Deputy Chief Justice Saldi informed the petitioners that they may revise their petition within fourteen (14) days. The revision must be submitted by Thursday, October 30, 2025, at 12:00 WIB at the latest.

Author: Mimi Kartika

Editor: N. Rosi.

Translator: Rizky Kurnia Chaesario

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 prevails.

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