The Petitioners’ legal counsel delivering the revised petition at a panel hearing for the judicial review of Law No. 7 of 2021 on the Harmonization of Tax Regulations, Monday (10/20/2025). Photo by MKRI/Ifa.

---

JAKARTA (MKRI) — Two private-sector employees, Rosul Siregar and Maksum Harahap, have revised their petition for the judicial review of Law No. 7 of 1983 on Income Tax (Income Tax Law) as last amended by Law No. 7 of 2021 on the Harmonization of Tax Regulations (HPP Law) against the 1945 Constitution of the Republic of Indonesia (the 1945 Constitution). In their revised petitum, the Petitioners requested the Constitutional Court (MK) to exclude severance pay, pension funds, old-age savings (THT), and old-age benefits (JHT) from the income tax object.

“We request that severance pay, pension funds, old-age savings (THT), and old-age benefits (JHT) be excluded from income tax objects,” said Ali Mukmin, the Petitioners’ legal counsel, reading one of the revised petitums at the petition revision hearing for Case No. 170/PUU-XXIII/2025 on Monday, October 20, 2025, in the Constitutional Court courtroom, Jakarta.

The Petitioners submitted seven petitum points. They requested the Court to declare Article 4 paragraph (1) and Article 17 of the Income Tax Law in conjunction with the HPP Law conditionally unconstitutional insofar as they are interpreted to include severance pay, pension funds, THT, and JHT as taxable income. They also requested the Court to order the Government, in this case the Minister of Finance and the Directorate General of Taxes, not to withhold income tax on their severance pay and JHT, and to establish that such payments are excluded from income tax objects.

In addition, the Petitioners revised the description of the Court’s authority, their legal standing, and the grounds of the petition.

Also read: Private Employees Object to Progressive Tax on Severance Pay and Pensions

At the preliminary hearing on October 6, 2025, the Petitioners had argued that the provisions being reviewed contradict the Constitution, particularly Article 28D paragraph (1) of the 1945 Constitution, which guarantees everyone’s right to fair legal recognition, assurance, protection, and equality before the law. They asserted that taxing severance pay and pension income treats retired or laid-off workers, who are economically vulnerable, as if they were still in a strong and productive position. This, they contended, violates the principle of fair legal certainty, as it places vulnerable groups on the same footing as productive workers, despite their differing socio-economic conditions.

The Petitioners explained that they would be entering retirement either this year or in the coming years, albeit at different companies. Given the current provisions, they expressed concern that their pension funds, intended as financial security after employment, would be significantly reduced due to progressive income tax deductions.

For reference, Article 4 paragraph (1) of the Income Tax Law stipulates:

“The objects of income tax shall be income, namely any increase in economic capacity received or accrued by a taxpayer, whether originating from Indonesia or abroad, which can be used for consumption or to increase the taxpayer’s wealth, under any name and in any form, including: (a) salary, wages, commissions, bonuses, gratuities, pensions, or other compensation for work performed; (b) honoraria, lottery prizes, and awards; (c) gross business profits; (d) gains from the sale or transfer of assets...; (e) refunds of taxes previously deducted as expenses; (f) interest; (g) dividends; (h) royalties; (i) rent; and (j) periodic payments.”

The hearing was chaired by Chief Justice Suhartoyo, accompanied by Constitutional Justice Daniel Yusmic P. Foekh and Constitutional Justice M. Guntur Hamzah as panel members. Before closing the session, Chief Justice Suhartoyo stated that the panel of justices would report the hearing to the other justices in a justice deliberation meeting (RPH) to determine whether the case would be decided without a plenary hearing or proceed to further examination in plenary.

Explore Case: Case No. 170/PUU-XXIII/2025 (in Bahasa Indonesia)

Author: Mimi Kartika
Editor: N. Rosi
PR: Fauzan F.

Translator: Yuanna Sisilia

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.

 

---