Who Can Be A Tax Proxy?

Constitutional Court has recently granted a lawsuit of an advocate who had been rejected as a Taxpayer’s representative (tax proxy) three times by the Tax Office. Article 32 paragraph 3a of Law Number 28/2007 on General Provisions and Taxation Procedures (KUP) is the subject of judicial review.

The article states that: The requirements and the exercise of rights or obligations of a proxy as stated in paragraph (3) is stipulated by or based on the Minister of Finance’s regulation.

Delegation of authority from the law to the Minister of Finance Regulation (PMK) is considered unconstitutional because it gives an excessive authority to the Minister of Finance. In the case experienced by the plaintiff, the implementation of Article 32 paragraph 3a of KUP Law by the Minister of Finance is considered limiting the citizen’s constitutional rights in this case, advocates to be a tax proxy.

The authority in question is expressed in PMK Number 229/ PMK.03/2014 on Requirements and Exercise of Rights and Obligations of a Proxy. The Minister of Finance, through the PMK, stipulates that only tax consultant and the Taxpayer’s employee may become a tax proxy. Thus, the chance for people of other professions to be a tax proxy is closed. The main requirement to become a proxy is that the tax consultant or the Taxpayer’s employee must understand and master the provisions of tax legislation.

To prove such mastery, a tax consultant must have Certificate of Tax Consultant (SKP) issued by Director General of Taxes or appointed officials as a proof of license to practice based on his/her skill level in tax (A, B, or C). As the precondition to obtain SKP or license to practice, the tax consultant has to pass Tax Consultant Certification Exam (USKP). The professional level exam of tax consultant is held by USKP Organizing Body established by Indonesian Tax Consultants Association (IKPI).

Retired Directorate General of Taxes (DGT) employee may also become a tax consultant or tax proxy under specific requirements. Aside from considering the time of service in DGT, the license to practice may be given to a retired DGT employee after passing equivalency test of tax consultant certification level.

As for the Taxpayer’s employee, to prove that they understand tax and are competent to become a tax proxy, the employee has to prove their legality in the form of tax brevet certificate issued by tax brevet educational institution course; certificate of formal education in tax at least Diploma III level issued by state or private university with accreditation status of A; or SKP.

Almost similar requirements also applies for Tax Court attorney. Aside from the obligation to own formal diploma/ brevet certificate, a Tax Court attorney must have a license of attorney from the Head of Tax Court.

Considering KUP Law, the general requirement of a tax proxy is to understand tax. In other words, anyone is possible to become a tax proxy as long as the person has qualified understanding in tax. Meanwhile, the technical regulation made by the Minister of Finance applies otherwise, limiting those considered appropriate in accompanying or representing Taxpayer.

In this case, the advocate suing the case was considered not fulfilling the qualification of tax proxy because the advocate has no tax consultant license to practice—despite the Brevet Tax Certifications of A and B from notable university owned by the advocate.

Implication

In deciding the case of Article 32 paragraph 3a of KUP Law judicial review, the Constitutional Court considered that the implementation of the article contradicted the Constitution of Republic of Indonesia of 1945 on a conditional basis and did not have any binding legal force so long as not taken as only related to technical-administrative matters and not a limitation and/or expansion of rights and obligations of citizen. In other words, the article has permanent legal force to the extent that it only regulates technical matters regarding tax proxy.

The problem is that the KUP Law does not stipulate in detail the technical and criteria of a person who can be a tax proxy. KUP Law also does not clearly regulate the standard of tax understanding a tax proxy shall have. Further authority regarding the case is delegated to the Minister of Finance instead by issuing PMK Number 229/PMK.03/2014 that limits the profession of tax proxy.

The Government and House Representative argued that the limitation of tax proxy was made as a form of protection to the tax-payer’s interest. However, the determination of requirements and exercise of rights and obligation of a tax proxy is wholly shifted to the Minister of Finance cq DGT who certainly “faces” the Taxpayers on daily basis.

Thus, it is neither the requirements nor the exercise of rights and obligations of a tax proxy that is being questioned by the Constitutional Court. Instead, the question is on the delegation of authority to the Minister of Finance that is too much because the practice of the authority is prone to conflict of interest.

Matters regarding recognition, respect, limitation, deduction, or retraction of certain rights of a citizen are supposed to be stipulated in regulation at the law level. In case of tax proxy, the law must describe the competency and understanding that shall be owned by the tax proxy, including the rights and obligations requirements and implementing rules.

Preference

The question arisen is who can be a tax proxy? Sure enough, by the issuance of Constitutional Court Decision Number 63/PUU-XV/2017, the occupation of tax proxy can no longer be monopolized by tax consultant. It means that anyone—as long as the person is competent and understands tax is possible to become a tax proxy.

However, the competency and tax understanding will always be debatable if the proof is unclear. That is to say, a test is still needed to demonstrate one’s competency and proficient tax understanding to become a tax proxy. In addition, it has to be clear as to which professional institution or agency is authorized to test as well as to issue the certification and license to practice for tax proxy

Since the coverage of service rendered is tax, ideally, university graduates majoring in tax get easier access to become a tax proxy. At least, tax universities can teach ethics and curriculum as well as hold final exam in the standard of tax proxy profession.

This is the same with lawyers who, in providing legal services, have to comply with the Advocate Law. The law stipulates in detail the definition of advocate, the scope of legal service that can be given by a lawyer, from sanction upon offenses to professional institution authorized in issuing the license of practice in this case, the lawyers association.

Aside from how the regulation will take form, the decision of Constitutional Court regarding the tax proxy which eliminates the monopoly of tax consultant will not significantly affect the preference of Taxpayer in appointing a proxy. After all, the number of tax consultants is currently around 3,500 people. This number is not proportional enough to defend the tax-payer’s insterest, in which the number to date is approaching 40 million Taxpayers.

Competency, understanding in tax issues, as well as experience can be the considerations of Taxpayer in choosing a proxy in the midst of the more wide-opened market.

 

 

http://mucglobal.com/upload/taxguide/files/TaxGuide2018-15_English.pdf