Ultimum Remedium as the Last Step of Tax Law Enforcement

The provision of tax law in Indonesia is a complex legal system. In addition to containing State Financial Administration Law or Hukum Administrasi Keuangan Negara (HAKN), the tax provisions contain criminal sanctions. Criminal provisions in tax law are in Article 39 of the Law on General Provisions and Tax Procedures. 

The provisions of Article 39 of the KUP Law, among others, regulate that every person who intentionally:

• Does not register him/herself to be given a Taxpayer Identification Number or does not report his business to be confirmed as a taxable entrepreneur;
• Misuse or use of the Taxpayer Identification Number without the right or confirmation of taxable entrepreneurs;
• Does not submit a notification letter;
• Submits a Notification Letter and information whose contents are untrue or incomplete;
• Refuse to be examined as referred to in Article 29;
• Shows books, records, or other documents that are false or falsified as if they were true, or do not describe the actual situation;
• Does not organize bookkeeping or recording in Indonesia, does not show or does not lend books, records, or other documents;
• Does not keep books, records, or documents that are the basis for bookkeeping or recording and other documents, including the results of data processing from bookkeeping that is managed electronically or organized by an online application program in Indonesia as referred to in Article 28 paragraph (11); or
• Does not remit the tax that has been withheld or collected.

 

which can cause losses to state revenues shall be punished with imprisonment for a minimum of 6 (six) months and a maximum of 6 (six) years and a fine of at least 2 (two) times the amount of tax payable that is not or underpaid and a maximum of 4 (four) times the amount of tax payable that is not or underpaid.

Up to this point, we can see that aside from imposing imprisonment, criminal provisions in tax law also impose fines. However, since Law Number 7 of 2021 concerning Harmonization of Tax Regulations was implemented, there has been a shift in the principle of the imposition of punishment.

Article 44B of the KUP Law as amended by the HPP Law, among others, stipulates that in the interest of state revenue, at the request of the Minister of Finance, the Attorney General may terminate the investigation of criminal offenses in the field of taxation for a maximum period of six months from the date of the request letter. The termination of a criminal offense investigation in the field of taxation, as referred to above is only carried out after the taxpayer or suspect has paid off the:

 

• losses to state revenue as referred to in Article 38, coupled with administrative sanctions in the form of a fine of one time the amount of losses to state revenue;
• losses to state revenue as referred to in Article 39 plus administrative sanctions in the form of a fine of three (three) times the amount of losses to state revenue or
• The amount of tax in the tax invoice, tax collection slip, tax withholding slip, and/or tax deposit slip, as referred to in Article 39A is added to an administrative sanction in the form of a fine of four (four) times the amount of tax in the tax invoice, tax collection slip, tax withholding slip, and/or tax deposit slip.

However, when the criminal case has been submitted to the court, the defendant can still pay off the loss to state revenue plus administrative sanctions as a consideration for prosecution without imprisonment.

The provisions above explicitly explain that the imposition of imprisonment under tax law is the last step in law enforcement. It means that as long as the taxpayer pays off the tax principal along with administrative sanctions, the taxpayer can be free from criminal charges.

This is commonly referred to as the Ultimum Remedium Principle. Where criminal law is only imposed on extraordinary crimes or in other words, if a case can be resolved through other means (kinship, negotiation, mediation, civil or administrative law), let these other channels be carried out first (Hukumonline 2022).

In his book entitled Principles of Criminal Law, Wirjono Prodjodikoro (2003) states that norms or rules in the field of state administration and state administrative law must first be responded to with administrative sanctions. However, if the administrative sanctions are not sufficient to achieve the goal of straightening the social balance, then criminal sanctions are also imposed as the ultimate (last) or Ultimum Remedium.

The application of Ultimum Remedium Principle in tax law is in line with law number 11 of 2020 concerning Job Creation. The Minister of Law and Human Rights, Yasonna Laoly, mentioned that the Job Creation Law contains two types of sanctions, namely administrative sanctions and criminal sanctions. Furthermore, Yasonna also mentioned that the Job Creation Law reforms the law in Indonesia, which previously prioritized criminal sanctions (Hukumonline 2020).

Related Regulations:

• Law No. 6 of 1983 on General Provisions and Tax Procedures, as last amended by Law No. 7 of 2021 on Harmonization of Tax Regulations.
• Law Number 11 of 2020 concerning Job Creation.

References

• Hukumonline. 2022. Arti Ultimum Remedium sebagai Sanksi Pamungkas. Juli 22. https://www.hukumonline.com/klinik/a/arti-ultimum-remedium-sebagai-sanksi-pamungkas-lt53b7be52bcf59/.
• —. 2020. Perlu Penegasan Norma Ultimum Remedium Soal Pengenaan Sanksi di Aturan Turunan UU Cipta Kerja. Desember 20. https://www.hukumonline.com/berita/a/perlu-penegasan-norma-i-ultimum-remedium-i-soal-pengenaan-sanksi-di-aturan-turunan-uu-cipta-kerja-lt5fe9c7c822f4e?utm_source=website&utm_medium=internal_link_klinik&utm_campaign=ultimum_remedium_ciptaker.
• Prodjodikoro, Wirjono. 2003. Asas-Asas Hukum Pidana di Indonesia. Bandung: Refika Aditama.