Supreme Court: Proven Tax Crime, Offenders May Be Exempt from Prison Sentences

Although found guilty, the Supreme Court (MA) allows judges to release perpetrators of criminal acts in the field of taxation from prison sentences.

This is one of the key provisions of the latest Supreme Court Regulation (PMA), namely Number 3 of 2025, which was issued and has been in effect since 10 December 2025.

Exemption from a prison sentence may be granted, provided that the defendant pays the principal tax and administrative tax sanctions. Payment may be made even after the charges have been read, but before the verdict is pronounced.

Aligned with Tax Regulations

This provision is in line with the principles applied in handling tax crime cases, one of which is to optimize the recovery of losses to state revenue.

This Supreme Court provision is also aligned with regulations in the taxation field, for example, Government Regulation (PP) Number 50 of 2022, which is a derivative of Law Number 2 of 2022 on Job Creation.

PP 50/2022 states that investigations into tax crimes may be terminated if the taxpayer makes a disclosure of inaccuracies or settles the outstanding tax liabilities.

Originating from Tax Audits and Preliminary Evidence

Tax crime cases may arise if, during an audit conducted by tax officers, indications of a tax crime are found.

After that, the tax authority will proceed to the preliminary evidence examination stage. If preliminary evidence is found, the process will continue to the investigation stage and the designation of a suspect.

Once the case file is complete, the tax crime investigation will then be submitted to the court.

Other Provisions on Tax Crimes

In addition to regulating the exemption from imprisonment for those who settle the principal tax and tax sanctions, Supreme Court Regulation Number 3 of 2025 also regulates the following matters.

1. Basic Principles of Tax Crime Cases

In general, in handling tax cases, judges must consider a sense of justice, benefits for the state and society, legal certainty, a balance between state losses and punishment, transparency of the process, and responsibility for decisions.

2. Parties Bearing Responsibility

Parties who may be held accountable in tax crimes may be individuals, such as tax officers, consultants, or other parties, as well as business entities or corporations.

In addition, parties who order, assist, enjoy the proceeds, or control from behind the scenes may also be held responsible. Both direct perpetrators and the “masterminds” can be held accountable.

3. Corporate Crimes

With regard to crimes committed by corporations, accountability may be imposed on management, controllers, or beneficial owners.

Thus, a person who is not listed in the company’s organizational structure but controls the company may still be subject to criminal liability.

Accordingly, if parent and subsidiary companies are involved, each may be held responsible according to their respective roles.

Even companies that are bankrupt, dissolved, or whose management has passed away are not automatically free from criminal liability. State Attorneys may file claims against their heirs.

4. Pretrial Proceedings

Suspects of tax crimes may submit a request for pretrial proceedings. The pretrial will be examined by the district court in the jurisdiction where the investigator or public prosecutor is domiciled.

However, if the defendant submitting the request is included in the Wanted Persons List (DPO), the judge must reject the pretrial request.

5. Asset Safeguarding and Seizure

Investigators may request the blocking of accounts or assets from the managing institutions. Blocking may be carried out to secure evidence or to recover state losses.

In addition, documents and goods may be seized even if there is no suspect yet. Seizure may be carried out on accounts, receivables, securities, and other assets.

However, a seizure must be carried out with court approval, except in urgent circumstances. In addition, asset seizure may only be conducted after a suspect has been designated.

6. Appointment of Tax Crime Judges

The examination of tax crime cases is conducted by judges who have attended technical education and training in the field of taxation. However, if such judges are unavailable, the case may be handled by the chief judge or deputy chief judge of the court.

7. Trial without the Presence of the Defendant

If the defendant is absent without a valid reason, the trial of the tax crime case may continue. The judge may even impose a verdict without the defendant’s presence.

According to this PMA, the defendant’s legal counsel may not represent the defendant. However, the defendant may still file an appeal against the decision no later than seven days after the verdict is pronounced.

8. Proportion of Tax Crime Punishment

If there is more than one perpetrator, the panel of judges shall impose sentences in accordance with each perpetrator’s role.

This means that fines are apportioned proportionally based on each perpetrator’s contribution to the loss to the state. The proportional calculation of fines may consider the portion of loss to state revenue, the benefits received by the defendant, or other considerations.

For fines imposed, the defendant may not substitute them with confinement, and the fine must be paid by the convicted person.

If the convicted person’s assets are insufficient, the fine may be substituted with imprisonment for a maximum period equal to the imprisonment sentence decided.

In addition, in rendering a decision, the panel of judges may not impose a suspended sentence on perpetrators of tax crimes.

Preventing Differences in Interpretation

In general, with the issuance of Supreme Court Regulation Number 3 of 2025, it is expected to serve as a guideline and prevent differences in interpretation among judges in handling tax crime cases.

This is because, until now, there have been no specific provisions governing the procedures for handling tax crime cases in court. (ASP/KEN)