Thursday, July 20, 2017
House Criticizes Several Articles in Government Regulation in Lieu of Law on Access to Financial Information for Tax Purposes
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Davita Irene, Nanda Narendra Putra


Meeting between Commission XI of the House and the Ministry of Finance. Photo by: NNP


All Commission XI factions at the House of Representatives (Dewan Perwakilan Rakyat – DPR) have agreed to further discussions on the Draft Bill (Rancangan Undang-Undang – RUU) on the Stipulation of the Government Regulation in Lieu of Law No. 1 of 2017 on Access to Financial Information for Tax Purposes (Perppu 1/2017). Commission XI DPR will then ultimately decide whether Perppu 1/2017 is going to be accepted or not.
Against this background, the Chairperson of Commission XI DPR, Melchias Mekeng, has asserted that before deciding to accept Perppu 1/2017, the Commission XI DPR will be asking for input from experts and a written statement from the government, specifically the Ministry of Finance, in relation to several questions that the various factions raised last Monday.
Among the various experts that have been invited are former Vice President Boediono, Hadi Poernomo (former Director General of Tax), Chatib Basri (an economic expert) and Arwin Rasyid (former President Director of Bank CIMB Niaga), as well as several academics from the University of Indonesia, Gadjah Mada University and Airlangga University.
Mr. Mekeng also added that each faction would be taking notes on all of the input offered by the invited experts, and that such input would subsequently be used in order to amend the Draft Bill on Stipulation of Perppu 1/2017 after it passes into Law, as well as to revise Law No. 16 of 2009 on the Stipulation of the Government Regulation in Lieu of Law No. 5 of 2008 on the Fourth Amendment to Law No. 6 of 1983 on General Provisions and Tax Procedures.
“In 2011, Indonesia committed to the Automatic Exchange of Information (AEol) initiative. That seems to me to be a good thing and hopefully our target will soon be achieved so that we can enter the AEoI mechanism,” Mr. Mekeng explains.
Hukumonline has discovered that a number of members of DPR Commission XI remain critical of the substance of Perppu1/2017. For example Andreas Eddy Sustetyo, a faction member from the PDI Perjuangan party, as questioned why the Perppu incorporates the disclosure of financial information relating to domestic taxpayers.
Muhammad Sarmuji, a Commission XI member from the Golkar party has also raised this query. In spite of the fact that these exchanges of information, as mandated under the AEol mechanism, concern Indonesian taxpayers who are living abroad or foreign citizens living in Indonesia, Mr. Sarmuji is concerned that the Directorate General of Tax will also pursue domestic taxpayers, as Perppu 1/2017 does in fact remain open to the possibility of such investigations. In fact, according to Kardaya Warnika, a member of both Commission XI DPR and the Gerindra party, Perppu 1/2017 should be able to offer certainty as regards the safety of taxpayers who deposit their money with financial-service institutions or other financial entities within Indonesia.
“Perppu 1/2017 specifically addresses access to Financial Information. However, Article 2, Paragraph (3) of Perppu 1/2017, which addresses the balance or value of financial accounts, remains somewhat ambiguous and could potentially be applied more widely,” Mr. Kardaya explained.
However, the Minister of Finance, Sri Mulyani has rejected the use of the term “ambiguous article” as has been used to criticize Article 2, paragraph (3) of Perppu 1/2017. Mulyani instead insists that this article needs to be read and digestive fully from its first paragraph all the way down to its eighth paragraph in order to properly ascertain the government’s intention, which is to specifically clarify the mandate of the international AEol treaty. Mrs. Mulyani has also insisted that Article 2 paragraph (3) of Perppu 1/2017 guarantees that taxpayers will be protected, as the openness of any financial information is limited to the five points which are set out in that paragraph.
Mr. Sustetyo asserts however that it is indeed accurate to insist that the substance of Article 2, paragraph (2), part (b) involves an “ambiguous article” if it is associated with the substance of Article 4 of Perppu 1/2017.
“We have read it carefully and Article 2, paragraph (2), part (b) relate to Article 4 of Perppu 1/2017 and not only to AEoI,” Mr. Sustetyo has insisted.
In addition, a number of other members of DPR Commission XI, such as the Demokrat faction and Rooslynda Marpaung, have also raised questions regarding the confidentiality of the financial information which is accessed by tax officials during AEol exchanges and which involve domestic tax interests. According to Marpaung, misuses of information could arise, especially in terms of Article 6 of Perppu 1/2017, which appears to grant a kind of immunity to officials working at the Ministry of Finance, the OJK and financial services institutions, as well as to the employees of these institutions.
Misbakhun, a Golkar faction member of Commission XI, has also joined the debate and has sought to remind the government that it must be consistent when it is formulating technical regulations which take the form of Ministry of Finance Regulations (Peraturan Menteri Keuangan - PMK). According to Misbakhun, the government should not be allowed to regulate areas which are not specifically addressed under Perppu 1/2017. Indeed, Law No. 11 of 2011 on the Establishment of Laws and Regulations states that no implementing regulations should exceed the substance of their parent regulations.

Perspectives on Perppu 1/2017, as stated by the 10 DPR Commission XI Factions:
PDI Perjuangan Has agreed to discuss Perppu 1/2017 further in accordance with Law No. 17 of 2014 (MD3 Law)
Golongan Karya (Golkar) After taking note of the Ministry of Finance’s statements, Golkar have stated the urgency of Perppu 1/2017. The Golkar faction has thus agreed to move on to the next stage of discussions.
Gerindra The majority of the party is ready to discuss and to demand further explanations and clarifications. 
Demokrat The Demokrat party has agreed to proceed in accordance with the underlying mechanism.
PAN Pan is pleased to accommodate the government’s efforts to expand the country’s tax base. However, it is still seeking clarification from various parties.
PKB PKB has agreed to further discussions.
PKS PKS has agreed to further discussions
PPP PPP has agreed to further discussions.
Nasional Demokrat Provided that the majority of the party understands Perppu 1/2017, then the party agrees to further discussions.
Hanura After being summoned three times by the Chairman of Commission XI DPR, the Hanura party finally agreed with the majority of factions.
Source: Hukumonline
Unfortunately, Mrs. Mulyani has been unable to respond to questions and criticism on a specific basis, however she has explained that the government remains open to any input which the various factions may wish to submit. Even in terms of the abovementioned PMK, the Ministry of Finance has agreed to formulate the relevant rules in consultation with DPR Commission XI.
Closing the reasons meeting, Mr. Mekeng asserted that out of 10 factions, nine had already agreed to engage in further discussions, with the exception of Hanura. However, Hanura were deemed to also agree in principle with the ongoing process.