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Over recent years the Indonesian Tax Office has sought to increase state revenue from the collection of taxes. The government has set up a specialized Tax Court under Law No 14 Year 2003 to replace the existing Tax Dispute Settlement Body. The Court operates under the auspices of the Supreme Court, Ministry of Justice and Human Right (MoJ) and, to a certain extent, the Ministry of Finance (MoF) for examining an appeal over tax authority stipulation. Any decision rendered by the judge is considered as binding on both parties and the remedy would possibly be through a civil review. A tax bearer may use qualified and authorized tax attorneys to provide advice or representation. Further, decree of MoF No 450 Year 2003 has ruled that only Indonesian citizens licensed by the chairman of the Tax Court and empowered with specific power of attorney may act as tax attorneys. The Court also supervises the conduct of tax attorneys during hearings. Previously, tax disputes were settled by the Tax Dispute Settlement Body, which was created by Law No 17 Year 1997.

A tax bearer that files claims with the Tax Court will not be exempt from paying further taxes. This rule creates uncertainty and could be seen as unfair.

Nowadays, based on the complexity and enforcement of the tax dispute and the knowledge and expertise required from the examining judge, the chairman of Tax Court is allowed based on the decree of MoF No 449 Year 2003 to assign an ad hoc judge to a case.

On the opposite side of the Tax Office, for the tax bearer who still fails to pay taxes, both the Indonesian minister of finance and minister of justice and human rights on June 25 pledged a Joint Decree of MoF No 294 Year 2003 and MoJ No M-02-UM.09-01 Year 2003 to imprison certain uncooperative tax bearers. This will apply to bearers liable for tax of at least Rp100 million ($11,795), where there is doubt about their good faith to pay, where they have failed to pay for more than 14 days after being notified of the distress warrant and where the tax bailiff has a permit from the minister of finance and director general of tax. Several Tax Service Offices have called for the director general of tax, Hadi Purnomo, to review the qualifications of 18 tax bearers (including expatriates). So far two are reported to have been imprisoned.

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