The Draft Law on General Provisions and Tax Procedures 2021 (“RUU KUP”) continues to generate polemics. Currently, the DPR is still collecting DIM (Problem Inventory List) related to the bill. This time, Executive Director of the Pratama-Kreston Tax Research Institute (TRI) Prianto Budi Saptono highlighted the provisions for delegation of implementing implementing regulations in the KUP Bill.
In accordance with Article 5 paragraph (2) of the 1945 Constitution, to implement the law, the President should establish government regulations. This is also regulated in Article 48 of the KUP Law which states that Government Regulations are made to further regulate matters that are not sufficiently regulated in the KUP Law.
However, Law no. 12/2011 concerning the Formation of Legislative Regulations provides for the delegation of authority to one of the ministers to elaborate a law (UU). The condition is that the ministerial regulations which become the implementing regulations of the law are technical administrative in nature. These provisions are contained in letter A number 211 of Appendix II Chapter II Special Matters of Law no. 12/2011.
For the context of the KUP Bill, there are 41 Minister of Finance Regulations (PMK) which are planned to become implementing regulations for the KUP Bill. Prianto believes that the delegation of authority to make implementing regulations in the KUP Bill to the Minister of Finance does not yet have a clear administrative technical scope. This means that delegating authority from the law directly to the PMK is not justified if the content is not of a technical administrative nature.
“Well, the problem is that there are no criteria that regulate what administrative techniques are like,” continued Prianto. The risk is that the PMK, which is the implementer of the KUP Bill, can regulate matters that apparently exceed its authority so that there are new legal norms outside the KUP Bill that are being considered.
Prianto gave the example of Article 20A paragraph (2) of the KUP Bill which stipulates that the Director General of Taxes can request tax collection assistance from partner countries or partner jurisdictions. Meanwhile, paragraph (10) of Article 20A states that provisions regarding procedures for requesting tax collection assistance are regulated in the PMK. The reason is, there is no certainty that the Minister of Finance will only regulate technical administrative matters (not substantive) in the PMK as implementing regulations for Article 20A paragraph (10).
Prianto understands that Law no. 12/2011 does not specify the scope of what “administrative technical matters” are. In other words, “Through the delegation of authority, the KUP Bill seems to give a “blank cheque” to the Minister of Finance,” said Prianto.
For cases like the “blank check” above, there is already a precedent. The Constitutional Court (MK) annulled the provisions of PMK No. 229/PMK.03/2014 concerning Requirements and Implementation of the Rights and Obligations of a Power of Attorney (“PMK 229”). PMK 229 is a mandate from Article 32 paragraph (3a) of the KUP Law which states that the requirements and implementation of the rights and obligations of taxpayers’ powers of attorney are regulated by or based on the PMK. In fact, the MK Panel of Judges stated that PMK 229 did not have binding legal force because it conflicted with Article 32 paragraph (3) of the KUP Law and its explanation.
The MK decision above is contained in decision no. 63/PUU-XV/2017. The Constitutional Court considers that the delegation of authority to regulate administrative technical matters is not intended to give more authority (over capacity of power) to the Minister of Finance. However, this delegation only further regulates the “terms and procedures for the exercise of power”. This means that the regulation must not contain content that should be higher regulatory content, let alone legal content.
