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Jakarta, Ideatax -- The Constitutional Court has ruled that some provisions regarding preliminary evidence examination are in conflict with the 1945 Constitution. Through Constitutional Court Decision number 83/PUU-XXI/2023 pronounced in February 2024, the Constitutional Court declared that the examination of preliminary evidence as regulated in Article 43A paragraphs (1) and (4) of Law Number 6 concerning General Provisions and Taxation Procedures as last amended by Law Number 7 of 2021 concerning Tax Harmonization, is in contradiction with the 1945 Constitution.
In Article 43A, paragraph (1) of the UUP states that the Director General of Taxation is authorized to conduct a preliminary evidence examination based on information, data, reports, and complaints before criminal investigations in the field of taxation are carried out. By, the Constitutional Court, this provision was amended to state that "the Director General of Taxation is authorized to conduct a preliminary evidence examination based on information, data, reports, and complaints before criminal investigations in the field of taxation are carried out, as long as there is no coercive action.
In its legal considerations, the Constitutional Court stated that a preliminary evidence examination has the same status as an investigation. Therefore, the Constitutional Court opined that there should be no coercion in the preliminary evidence examination. Furthermore, the Constitutional Court opined that although the purpose of a preliminary evidence examination is to compel taxpayers to pay taxes in accordance with their obligations, this coercive nature should not violate an individual's human rights. However, what exactly is a preliminary evidence examination? Through this article, we will briefly discuss this preliminary evidence.
A preliminary evidence examination is an examination conducted to obtain preliminary evidence of alleged criminal acts in the field of taxation. Meanwhile, tax crimes are defined as acts punishable by criminal sanctions, including:
- Not registering for a Taxpayer Identification Number or failing to report their business to be registered as a Taxable Entrepreneur;
- Abusing or using a Taxpayer Identification Number or Entrepreneur Registration without the right to do so;
- Not submitting a Notification Letter;
- Submitting a Notification Letter and/or information that is untrue or incomplete;
- Refusing to undergo an examination as referred to in Article 29;
- Showing false or forged bookkeeping, records, or other documents as if they were true, or not reflecting the actual situation;
- Not maintaining bookkeeping or records in Indonesia, not showing or lending books, records, or other documents;
- Not storing books, records, or documents that are the basis of bookkeeping or records and other documents including data processing results from bookkeeping managed electronically or run as an online application program in Indonesia as referred to in Article 28 paragraph (11); or
- Not depositing taxes that have been deducted or collected.
Preliminary evidence examinations are conducted based on the development and analysis of intelligence activities or other activities. This is regulated in Minister of Finance Regulation number 177 of 2022 regarding preliminary evidence of criminal acts in the field of taxation. The results of the development and analysis of intelligence activities or other activities are documented in implementation reports for further review.
The review as mentioned above is conducted to determine three things. First, if there is an allegation of a tax crime, it will be followed by a preliminary evidence examination. Second, if there is no allegation of a tax crime, it will not be followed by a preliminary evidence examination. Third, if a tax crime is known immediately, it will be followed by an investigation without a preliminary evidence examination.
Preliminary evidence examinations can be conducted openly or closed. Preliminary evidence examinations conducted openly are preceded by the submission of a preliminary evidence examination notice to the individual or entity being examined. Meanwhile, in a closed preliminary evidence examination, no notice of the preliminary evidence examination is given to the individual or entity being examined.
Both open and closed preliminary evidence examinations are carried out within a maximum period of twelve months from the submission of the examination notice or from the date of the examination notice. However, the preliminary evidence examiner can request an extension of the examination period if the preliminary evidence examination cannot be completed within twelve months.
In conducting a preliminary evidence examination, the examiner has several obligations, including: submitting a preliminary evidence examination notice and other letters related to the preliminary evidence examination, showing the examiner's identification card, showing the preliminary evidence examination order, returning the evidence obtained, keeping the information obtained in the preliminary evidence examination confidential from unauthorized parties, and securing the evidence found in the preliminary evidence examination.
Furthermore, in a preliminary evidence examination, the examiner is also authorized to borrow books and records that are the basis of the taxpayer's bookkeeping, access or download electronically managed data, enter and inspect certain places or rooms suspected of being used to store books and records, seal certain places or rooms, request necessary information and/or evidence from third parties related to the taxpayer being examined, request information from other relevant parties, and take other actions necessary in the preliminary evidence examination.
So, in summary, a preliminary evidence examination is a crucial step in determining whether there is evidence of a tax crime and is conducted by competent authorities with specific legal obligations and powers.
