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CONSOLIDATION OF LAW OF THE REPUBLIC OF INDONESIA

NUMBER 19 OF 1997

CONCERNING

TAX COLLECTION WITH COERCE WARRANTS AS

AMENDED BY LAW NUMBER 19 OF 2000

CHAPTER I

GENERAL PROVISIONS

Article 1

For the purpose of this law, the meaning of:

1. Taxes shall be all kinds of taxes collected by the central government, including import duties and excise, and the taxes collected by regional administrations, pursuant to the regional laws and regulations;

2. A Taxpayer shall be an individual or entity that pursuant to the tax laws is stipulated to perform tax obligations, including a collecting or withholding agent of certain taxes;

3. A Tax Bearer shall be an individual or entity responsible for the payment of taxes, including a proxy in exercising the rights and fulfilling the obligations of a Taxpayer pursuant to the tax regulations;

4. An entity is a group of people and or capital that forms a unity that either conducts business or does not conduct business including limited company, limited partnership, state or local government owned enterprise in whatever name and form, firma, kongsi, cooperative, pension fund, partnership, association, foundation, public organization, social and political organization, or any similar organization, institution, permanent establishment, and any other form of entity;

5. An official shall be one authorized to appoint and discharge a Tax Bailiff, issue a Notice of Prompt and Outright Collection, a Coerce Warrants, a Notice of Seizure, a Notice of Seizure Removal, a Notice of Auction, a Notice of Minimum Price Determination, Notice of Auction Adjournment, a Notice of Confinement and other necessary notices/letters/orders needed for tax collection in regards of a Tax Bearer's failure to settle part or all of his/its tax due pursuant to the prevailing acts;

6. A Tax Bailiff shall be an executor of tax collection measures which encompass prompt and outright collection, the notification of a Coerce Warrant, seizure and confinement;

7. A District Court shall be one whose jurisdiction covers the place where a tax collection measure is taken;

8. Tax Due shall be a tax which must still be paid, including an administrative sanction in the form of an interest, a fine or surcharge as set forth in a Tax Assessment Notice or in similar notices based on the tax laws;

9. Tax Collection shall be a series of measures intended to make a Tax Bearer settle his/its tax due and tax collection fee by serving him/it a reprimand and warning, implementing outright and automatic collection, sending a Coerce Warrant, proposing a travel ban, implementing seizure, implementing confinement and selling seized property;

10. A Letter of Warning, a Letter of Reprimand or other similar letters are letters issued by an official to reprimand or warn a Taxpayer to pay the tax due.

11. Prompt and Outright Collection shall be a tax collection measure which is implemented by a tax bailiff against a Tax Bearer without waiting for the due date of the payment, including all tax dues of all types of taxes, taxable periods, and taxable years;

12. A Coerce Warrant shall be a letter of instruction to pay tax due and tax collection fee;

13. Tax Collection Fee shall be the expenses incurred for the implementation of Coerce Warrant, Notice of Seizure, Notice of auction, Notice of Auction Adjournment, appraiser fee, and other expenses in connection with tax collection;

14. Seizure shall be the act of a tax bailiff to take over control of the property of a Tax Bearer as a collateral for the settlement of the tax due pursuant to the prevailing acts;

15. An Object of Seizure shall be the property of a Tax Bearer which is turned into a collateral for a tax due;

16. A property shall be any object or right which is turned into an object of seizure;

17. An auction shall be any sale of property before the public by means of oral or written bidding by gathering interested parties or prospective buyers;

18. An Auction Office shall be one authorized to undertake sale through auction;

19. Auction Proceedings shall be an official report on the implementation of an auction; drawn up by an auction official or his proxy in the form stipulated by the prevailing acts;

20. Travel ban shall be a temporary prohibition imposed on a particular Tax Bearer to leave the territory of the State of the Republic of Indonesia on the basis of certain reason pursuant to the prevailing acts;

21. Confinement shall be temporary restraint of the freedom of a Tax Bearer by placing him in a certain place;

22. A Lawsuit or Denial shall be a legal effort regarding the implementation of tax collection and ownership of property as regulated in the prevailing acts;

23. A Head of a Region shall be a governor, a head of regency, or a mayor;

24. A Local Government shall be one whose jurisdiction encompasses the place where a tax collection measure is taken;

25. The Minister shall be the Minister of Finance of the Republic of Indonesia;

26. Day shall be calendar day.

Elucidation of Article 1

Sufficiently clear.

CHAPTER II

IT OFFICIALS AND

TAX BAILIFFS

Article 2

(1) The Minister shall be authorized to appoint an official for the collection of taxes imposed by the central government.

(2) A regional head shall be authorized to appoint an official for the collection of regional taxes.

(3) The official as referred to in paragraph (1) and paragraph (2) shall be authorized to:

a. appoint and discharge a tax bailiff;

b. issue:

1) A Letter of Warning, a Letter of Reprimand or other similar letters;

2) A Notice of Prompt and Outright Collection;

3) A Coerce Warrant;

4) A Notice of Seizure;

5) A Notice of Confinement;

6) A Notice of Seizure Removal;

7) A Notice of Auction;

8) A Notice of Minimum Price Determination;

9) A Notice of Auction Adjournment; and

10) Other letter necessary for the implementation of tax collection.

Elucidation of Article 2

Paragraph (1)

This provision authorizes the Minister to appoint an official for the collection of taxes imposed by the central government. Referred to the official for the collection of taxes imposed by the central government shall be among others the Head of a Tax District Office, or the Head of a Tax District Office for Land and Building Tax. As for those referred to as taxes imposed by the central government shall be, among other things, the income tax, the value added tax on goods and services and the sales tax on luxury goods, the land and building tax, import duties, and excise.

Paragraph (2)

The authority to appoint the official for the collection of regional taxes shall be granted to a regional head. Referred to the official for the collection of regional taxes shall be, for example, the head of regional revenue service. As for those referred to as regional taxes shall be the taxes collected by regional administrations, among other things, the hotel and restaurant tax, the street illumination tax, and the motorized vehicle tax.

Paragraph (3)

This paragraph regulates the provision on delegation of authority to a tax collection official to appoint and dismiss a Tax Bailiff, issue a Reprimand, a Warning, or other letters of the same type, a Notice of Prompt and Outright Collection, a Coerce Warrant, a Notice of Seizure, a Notice of Confinement Hostage, a Notice Seizure Removal, A Notice of Auction, A Notice of Minimum Price Determination, Auction Adjournment, or other letters. Referred to as other letters necessary for a tax collection are an application for date and time schedule of an auction to an auction office and a request for Identification Papers of Land Registration (SPKT) to National Land Agency/Land Office.

Article 3

(1) A tax bailiff shall be appointed and discharged by the official.

(2) The Minister shall stipulate the requirements and procedures for appointment and discharge of a tax bailiff.

Elucidation of Article 3

Paragraphs (1) and (2)

In implementing his tasks, a tax bailiff shall constitute the person implementing the execution of a ruling, which is of equal standing to a court ruling with a permanent legal force. Therefore, to be appointed as a tax bailiff, one must fulfill certain requirements stipulated by the Minister, for example, the requirement that one must have the lowest educational level of that of a general secondary school or anything of equal standing and must already complete special education and training as a tax bailiff. Under the consideration that a tax bailiff must be stationed at every office of the official, either the official for the collection of taxes imposed by the central government or one for the collection of regional taxes, the authority to appoint and dismiss a tax bailiff shall be granted to the official with the requirements and the procedure stipulated by the Minister serving as the guideline.

Article 4

Before assuming his position, a tax bailiff shall state a vow or make a pledge in accordance with his religion or faith in the presence of the official, reading as follows:

" I solemnly vow/pledge that I, in assuming this position, shall not give or promise anything to anybody, directly or indirectly, using whatever name or means." "I vow/pledge that I, in order to do or not to do something in this position, shall never receive directly or indirectly from anybody any promise or gift."

"I vow/pledge that 1 shall be faithful to and shall defend and apply Pancasila as the state's foundation and ideology, the Constitution of 1945, and all laws and other regulations prevailing in The State of The Republic of Indonesia."

"I vow/pledge that I shall always carry out my job in this position honestly and conscientiously and shall not discriminate people in performing my obligations and shall act in the best and most just manner as is proper of a sensible, honest, and act-and-justice-enforcing tax bailiff."

Elucidation of Article 4

Sufficiently clear,

Article 5

(1) A tax bailiff shall have duties to:

a. implement a Notice of Prompt and Outright Collection;

b. notify a Coerce Warrant;

c. implement the seizure of the property of a Tax Bearer based on a Notice of Seizure; and

d. implement confinement based on a Notice of Confinement.

(2) A tax bailiff, in implementing his tasks, must be equipped with a tax bailiff identification card and he must show it to a Tax Bearer.

(3) In conducting a seizure, a tax bailiff shall be authorized to enter and examine all rooms including opening cupboards, drawers, and other places in order to find the objects of seizure at a business place of the Tax Bearer and conduct seizure at Tax Bearer's domicile, residence, or at other places where the objects of seizure are kept.

(4) In implementing his tasks, a tax bailiff may request for the assistance of the police, district attorney, minister of justice, the local administration, the National Land Agency, the directorate general of sea transportation, a district court, banks or other parties in the framework of implementing tax collection.

(5) A tax bailiff shall carry out his tasks in the jurisdiction of the official appointing him, unless otherwise stipulated by the minister of regional head.

Elucidation of Article 5

Paragraph (1)

Subparagraph a

Sufficiently clear.

Subparagraph b

The term 'notifying a Coerce Warrant' shall be presenting the Coerce Warrant officially to a Tax Bearer with a statement and the delivery of a copy of the Coerce Warrant.

Subparagraph c

Sufficiently clear.

Subparagraph d

A tax bailiff shall implement confinement based on a Notice of Confinement from the official in accordance with the permit given by the Minister or the governor/head of a first-level region.

Paragraph (2)

This provision requires that a tax bailiff should, in implementing his obligations, be completed with an identification card issued by the official. This is aimed as a personal evidence for a tax bailiff to prove that he is a legal tax bailiff actually assigned to take a tax collection measure.

Paragraph (3)

This provision regulates the authority that a tax bailiff has to find, in implementing a seizure, an object of seizure located at a Tax Bearer's business place, his domicile or his residence with account of the norms prevailing in the community, for example, by first asking the Tax Bearer for the permission. This authority is essentially not the same as a search referred to in the Criminal Procedural Code.

Paragraph (4)

In implementing his tasks, a tax bailiff may make a request for assistance to another party, for example, in the event that a Tax Bearer does not give a permission for or obstructing the implementation of seizure, a tax bailiff may ask the police or the prosecutor's office for help. Likewise, in the event of seizure of immovable property such as land, a tax bailiff may ask the National Land Agency or a regional administration for its help to examine the completeness of documents in the form of a description of ownership or other documents. In the event of seizure of a vessel with a particular gross volume, help may be requested from the Directorate General of Sea Transportation.

Paragraph (5)

Basically, a tax bailiff shall implement his tasks in the jurisdiction of the official

appointing him. However, if a city is divided a number of jurisdictions, for example in Jakarta, the Minister or a regional head shall be authorized to stipulate that a tax bailiff may implement his tasks outside the jurisdiction of the official appointing him.

For example:

Provided that there is a decree by the Minister, a tax bailiff from the tax district office of Jakarta Menteng may seize a property of a Tax Bearer located in the jurisdiction of the tax district office of Jakarta Pasar Minggu.

Article 6

(1) A tax bailiff shall implement a prompt and outright collection without awaiting the due date of the payment based on a Notice of Prompt and Outright Collection issued by the official if:

a. a Tax Bearer will permanently leave Indonesia or intend to do so;

b. a Tax Bearer transfers the property he owns or control in order to terminate or reduce the activities of the company or the work he does in Indonesia;

c. there are indications that a Tax Bearer will dissolve his business, or merge or (expand) his business, or transfers the business he owns or control, or other forms of restructuring;

d. the state will dissolve the business company; or

e. a third party seizes the property of the Tax Bearer or there are signs of bankruptcy.

(2) A Notice of Prompt and Outright Collection shall at least contain;

a. The name of the Taxpayer, or the name of the Taxpayer and the Tax Bearer;

b. The amount of the tax due;

c. An instruction to make payment; and

d. Tax settlement date

(3) The Notice of Prompt and Outright Collection shall be issued prior to the issuance of a Coerce Warrant.

Elucidation of Article 6

Paragraph (1)

The meaning of prompt and outright collection is a tax collection without waiting for the due date of payments of all tax dues and all kinds of taxes, tax period and tax year.

The Notice of Prompt and Outright Collection is notified directly by a Tax Bailiff to the Tax bearer.

If a Tax Bailiff finds out that the property owned by a Tax bearer will be seized by a third party or there are signs of bankruptcy, or a Tax bearer plans to dissolve his corporation, expands its business, hands over the company owned or controlled, immediately the Bailiff conducts a prompt and outright collection by seizing most of the properties owned by the Tax bearer concerned after a Coerce Warrant has been notified.

Referred to existing signs it is a strong indicator that a Tax bearer reduces or sells/hands over his properties so that there are no properties to seize.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

CHAPTER III

COERCE WARRANT

Article 7

(1) A Coerce Warrant shall have as its heading the words of "IN THE NAME OF JUSTICE AND GOD ALMIGHTY" and shall have an equal executorial power and legal position as a court ruling with a permanent legal force.

(2) A Coerce Warrant shall contain at least:

a. The name of the Taxpayer, or the name of the Taxpayer and the Tax Bearer;

b. The base of collection;

c. The amount of the tax due; and

d. An instruction to make payment.

Elucidation of Article 7

Paragraph (1)

In order to achieve effectiveness and efficiency in the collection of taxes on the basis of a Coerce Warrant, this provision shall endow a Coerce Warrant an executorial power and provide a legal position equal to that of a court ruling with a permanent legal force. In this way, a Coerce Warrant can be immediately enforced without the help of a court ruling and cannot be subject to an appeal.

Paragraph (2)

Sufficiently clear.

Article 8

(1) A Coerce Warrant shall be issued if:

a. the Tax Bearer fails to settle a tax due and a letter of warning or a reprimand or other similar letters have been issued to him

b. prompt and outright collection has been conducted against the Tax Bearer; or c. a Tax Bearer fails to comply with the provisions set forth in the decision of the approval for installment or postponement of tax payment

(2) A letter of warning, a letter of reprimand or other similar letters shall be issued if the Tax Bearer fails to settle his tax due until the due date of payment.

Elucidation of Article 8

Paragraph (1)

Subparagraphs a and b

Principally, a Coerce Warrant is issued after Letter of Reprimand, Letter of Warning, or other letters of the similar type Issued by an Official. In the case of prompt and outright collection, a Coerce Warrant is issued either before or after the issuance of Letter of Reprimand, or Letter of Warning or other letters of the same type.

The term "other letters of the similar type" covers other letters or other forms, which have the same function as Letter of Reprimand or Letter of Warning in efforts of tax collection before a Coerce Warrant is issued.

Subparagraph c

In certain condition, e.g., because a Tax bearer has liquidity problems, a Tax bearer based on his application can be given an agreement to pay in installments or postpone the tax payment by a decision of the official. As a result, the decision concerned binds both parties.

Therefore, if a Tax bearer cannot fulfill the provision in the agreement of installments or postponement of tax payment, a Coerce Warrant can be issued directly without Letter of Reprimand, Letter of Warning, or other letters of the same type.

Paragraph (2)

Sufficiently clear.

Article 9

(1) In the event that there are circumstances beyond the power of the official, a letter in lieu of a Coerce Warrant may be issued ex-officio by the official.

(2) The letter in lieu of a Coerce Warrant as referred to in paragraph (1) shall have the same executorial power and legal position as a Coerce Warrant as referred to in Article 7 paragraph (1).

Elucidation of Article 9

This provision is intended to regulate conditions beyond the power of the official, for example in the event that the original Coerce Warrant becomes damaged, illegible or unable to be located because of a theft, flood, a fire or an earthquake, the official can, ex-officio, issue a substitute Coerce Warrant with the same legal force and position as a Coerce Warrant.

Article 10

(1) A Coerce Warrant shall be notified by a tax bailiff by stating and delivering a copy of it to a Tax Bearer.

(2) The notification of a Coerce Warrant as referred to in article (1) shall be asserted in an official report which shall contain at least the day and date of the notification of the Coerce Warrant, the name of the tax bailiff, the name of the recipient and the place of notification of the Coerce Warrant.

(3) A Coerce Warrant for an individual shall be notified by a tax bailiff to:

a. a Tax Bearer at his residence, business place or other possible places;

b. an adult domiciled in the same place as the Tax Bearer or one working at the business place of the Tax Bearer if the Tax Bearer concerned cannot be found;

c. one of his heirs, or the executor of his testament, or the undertaker taking care of his inheritance if the Taxpayer is deceased and the inheritance has not been divided; or

d. all heirs if the Taxpayer is deceased and his inheritance has been divided.

(4) A Coerce Warrant for an entity shall be notified by a tax bailiff to:

a. The executive board, shareholders and capital owners either at the domicile of the entity concerned or their residences or at the possible places; or

b. A permanent employee at the domicile or the business place of the entity concerned if the tax bailiff cannot find any of those as referred to in subparagraph a.

(5) In the event that a Taxpayer is declared bankrupt, a Coerce Warrant shall also be notified to the supervising judge or the probate court and in the event that a Taxpayer is declared to be dissolved and in liquidation, a Coerce Warrant shall also be notified to the person or the entity assigned to perform the liquidation, or liquidators.

(6) In the event that a Taxpayer appoints a proxy by virtue of a power of attorney to exercise tax rights and perform tax obligations, the Coerce Warrant may be notified to the recipient of the said power of attorney.

(7) If the notification of a Coerce Warrant as referred to in Articles (3) and (4) cannot be implemented, the Coerce Warrant shall be conveyed through the local administration.

(8) In the event that residence, the business place or the domicile of a Taxpayer or a Tax Bearer is unknown, the Coerce Warrant may be conveyed by means of sticking the Coerce Warrant on the announcement board at the office issuing it, announcing it through the mass media or in other ways stipulated by the Minister of a regional head.

(9) In the event that a Coerce Warrant must be implemented outside the jurisdiction of the official, the said official shall request for assistance from an official whose jurisdiction covers the place for the implementation of the Coerce Warrant, unless otherwise stipulated by the Minister or a regional head.

(10) The official from whom help is requested as referred to in article (9) shall be obligated to assist the official requesting for help and notifying him of the measure already taken.

(11) In the event that a Tax Bearer or any party as referred to in article (3) and (4) refuses to receive a Coerce Warrant, a tax bailiff shall leave the said Coerce Warrant and record it in the official report that the Tax Bearer refuses to receive the Coerce Warrant and the Coerce Warrant shall be considered as having been notified.

(12) Objection made by Taxpayer shall not result in the suspension of the implementation of a Coerce Warrant.

Elucidation of Article 10

Paragraph (1)

In light of the fact that a Coerce Warrant has the same executorial power and legal status as grosses of the court decision which has got a permanent legal power, a notification by a Tax Bailiff to a Tax bearer is conducted by reading the whole content of a Coerce Warrant and both parties sign the Official Report as a statement that the Coerce Warrant has been notified, and then a copy of Coerce Warrant is given to the Tax Bearer, while the original one is kept in the official's office.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

If a Taxpayer is deceased and the estate has been divided, a Coerce Warrant is issued and notified to the heir(s). The Coerce Warrant concerned includes, among others, amount of delinquent tax due which has been divided proportionally to the estate accepted by each heir. If an heir has not come of age, a Coerce Warrant is given to his guardian.

Paragraph (4)

Subparagraph a

A notification of Coerce Warrant to an entity may be given;

- For a limited corporation, to the management, covering Directors, Commissioners, certain shareholders, and a person who obviously has the authority to determine or make a policy in running the corporation.

The meaning of a Commissioner covers a Commissioner as a person that is commonly called Board Directors, and a Commissioner as a corporation, which is commonly called member of commissioner. Meant by certain shareholders are the controlling shareholders or the major shareholders of an open limited corporation and all shareholders of a closed limited corporation;

For a permanent establishment, to head of representative office, head of branch office, or a responsible person;

For other corporation such as a partnership, a firma, and a limited partnership, to the Director, capital owner or a person appointed to run or control and responsible for the corporation concerned;

- For a foundation, to the head or a person who runs and controls and is responsible for the foundation concerned.

Subparagraph b

The term 'permanent employees' means employees of a company who work in departments financial, accounting, taxation, personnel, public relation, or general affairs, and not daily hired employees.

Paragraph (5)

Sufficiently clear.

Paragraph (6)

The term 'trustee' in this article means an individual or entity who receives a special trusteeship to conduct the tax rights and obligations.

Paragraph (7)

If a tax Bailiff does not meet anybody as referred to in article (3) and (4), officials of local regional government give the copy of Coerce Warrant to a Tax Bearer, at least at a level of secretary of a village or secretary of a rural area, by making an official report, which is then the copy is given to the Tax Bearer concerned.

Paragraph (8)

Sufficiently clear.

Paragraph (9)

Principally, if a Coerce Warrant is implemented outside of an official's jurisdiction, the official concerned must ask for help from other officials. Notwithstanding the provision above, if there are a number of jurisdictions in a city, based on a decree by the Minister or the related head of regional government, the official concerned can directly instruct his Bailiff to implement a Coerce Warrant outside of his jurisdiction without asking help from the local official.

Example:

If there has been a decree by the Minister, head of Land and Building Tax District Office of North Jakarta can directly instruct his Bailiff to implement a Coerce Warrant at the place of a Tax Bearer in Pasar Minggu South Jakarta, without having to request for help from the of Land and Building Tax District Office of South Jakarta.

Paragraph (10)

Sufficiently clear.

Paragraph (11)

If a Tax Bearer refuses to receive a Coerce Warrant by various reasons, e.g., because a Taxpayer is submitting an objection, the copy of Coerce Warrant concerned is left at the place of residence, place of business activity or domicile of the Tax Bearer, and it is recorded in an official report that the Tax Bearer does not want or refuse to receive the copy of Coerce Warrant. Therefore, a Coerce Warrant is considered to have been notified.

Paragraph (12)

Sufficiently clear.

Article 10A

Procedures of a prompt and outright collection and a Coerce Warrant shall be stipulated by a Ministerial Decree or Decision of the Head of Region.

Elucidation of Article 10A

Sufficiently clear.

Article 11

The implementation of a Coerce Warrant shall not proceed with seizure prior to the passage of 2 (two) times 24 (twenty-four) hours after the Coerce Warrant is notified as referred to in Article 10.

Elucidation of Article 11

The said period of 2 (two) times 24 (twenty-four) hours shall give an opportunity to the Tax Bearer to settle his tax due as set forth in the Coerce Warrant concerned.

CHAPTER IV

SEIZURE

Article 12

(1) If a tax due is not settled by a Tax Bearer within the period as referred to in Article II, the official shall issue a Notice of Seizure.

(2) Seizure shall be implemented by a tax bailiff in the presence of at least 2 (two) adults, who are Indonesian residents, known to the tax bailiff, and trustworthy.

(3) Every time seizure is implemented, a tax bailiff shall draw up an official report on the implementation of the seizure, which shall be signed by the tax bailiff, the Tax Bearer and the witnesses. (3a) In the event that the Tax Bearer is an entity, the official report on the implementation of seizure shall be signed by a member of board of directors, head of representative, branch manager, responsible person, or a permanent employee.

(4) Despite the absence of a Tax Bearer, seizure can still be implemented on a condition that one of the witnesses as referred to in article (2) represents the local administration.

(5) In the event that seizure is implemented in the absence of a Tax Bearer as referred to in article (4), the tax bailiff and witnesses shall sign the official report on the implementation of seizure.

(6) The official report on the implementation of seizure shall continue to have a binding force although the Tax Bearer refuses to sign it as referred to in article (3).

(7) The copy of the official report on the implementation of seizure may be stuck on a movable or immovable property, at the place where the seized property is located, or at public places.

(8) Seizure seal may be stuck or placed on a seized property.

Elucidation of Article 12

Paragraph (1)

Sufficiently clear.

Paragraph (2)

The Presence of witnesses is meant to ensure that seizure is implemented pursuant to the prevailing provisions.

Paragraph (3)

An official report on the implementation of seizure is a notification to a Tax Bearer and the community that the control over the property of the Tax Bearer is shifted from the Tax Bearer to the official. Therefore, in every seizure, a tax bailiff must draw up an official report on the implementation of seizure clearly and completely, containing at least the day and the date, the number, the name of the tax bailiff, the name of the Tax Bearer, the name and type of the property seized and the place of seizure.

Paragraph (3 a)

The signing of an official report on implementation of seizure;

- For a limited corporation, by the management, covering directors, commissioners, certain shareholders, and a person who is obviously has the authority to determine or make a policy in running the corporation;

The meaning of a commissioner covers a commissioner as a person that is commonly called board of directors, and a commissioner as a corporation which is commonly called member of commissioner. The term certain shareholders means the controlling shareholders or the major shareholders of an open limited corporation and all shareholders of a closed limited corporation;

- For a permanent establishment, by the head of representative office, head of branch office, or a responsible person;

- For other corporations such as a partnership, a firma, a limited partnership, by the director, the capital owner or a person appointed to run or control and responsible for the corporation concerned;

- For foundation by the head of foundation, or a person who runs and controls and is responsible for the foundation concerned.

This signing is intended to give an understanding that they are responsible for the obligation of the corporation concerned so that their own possessions can be the collateral of a tax due (could be seized).

Paragraph (4)

One of the witnesses from local administration shall at least a secretary of the village or secretary of the rural area.

Paragraph (5)

If the seizure is implemented in the absence of the Tax Bearer, the official report on the implementation of seizure must contain the reasons for the absence for the Tax Bearer. A witness from a regional administration shall serve as a person legalizing the seizure. Therefore, the said official report on the implementation of seizure shall remain valid and have a binding power.

Paragraph (6)

Sufficiently clear.

Paragraph (7)

Basically, seized property must have a copy of the official report on the implementation of seizure stuck on it, except if certain seized property cannot, by its nature, have an official report on the implementation of seizure be stuck on it, for example, cash or a plot of land.

Paragraph (8)

Sticking or provision of a seizure seal on seized property is intended as an announcement that seizure has been implemented, whether in the presence or in the absence of a Tax Bearer.

Article 13

The filing of an objection by a Taxpayer shall not result in postponement of the implementation of seizure.

Elucidation of Article 13

This provision is in line with Law Number 6 of 1983 concerning the General Provisions and Tax Procedures as amended by Law Number 9 of 1994, which, among others, regulates that the filing of an objection shall not postpone the obligation to pay taxes and the implementation of tax collection. Therefore, seizure can continue to be implemented although the Taxpayers file an objection.

Article 14

(1) Seizure may be conducted against the property of a Tax Bearer at the Tax Bearer residence, business place or domicile or at other places, including that which is controlled by another party or which is secured as a collateral for the settlement of particular debt, that may be in the form of:

a. movable property, including automobiles, jewelry, cash and term deposits, savings, current account balance, giro or other forms considered equal to it, bonds, tocks or other securities, receivables, and capital participation at another company; and or

b. immovable property, including land, buildings and vessels of certain gross volume.

(la) Seizure on entity Tax Bearer is conducted on company's property, members of board of

directors, head of representative, branch manager, responsible person, share holder, at

the Tax Bearer's domicile, their residences or other places.

(2) The seizure as referred to in article (1) shall be implemented up to the extent that the value of the seized property is most likely sufficient to settle the tax due and tax collection fee.

(3) Other rights which may be seized other than those as referred to in article (1) shall be regulated in a government regulation.

Elucidation of Article 14

Paragraph (1)

The purpose of seizure is to obtain collateral for settlement of a tax due from the Tax Bearer. Therefore, seizure can be implemented against entire properties if the Tax Bearer, be it at the residence, business place or domicile of the Tax Bearer and at other place although the control over this property is in the hands of another party.

Basically, seizure shall be implemented by giving a priority to movable property.

However, in certain circumstances, seizure can be implemented directly against immovable property without the seizing of movable property. These certain circumstances are, for example, related to a tax bailiff not finding any movable property which may be seized, or the movable property he finds not having any value or the price is not compatible with the tax due.

Ownership of land shall be defined as, among others, the proprietorship, the right of use, the land title for building purpose and the land title for business purposes.

Paragraph (la)

Principally, seizure of a corporation is executed on the company's properties, ffowwer, *f the value of the objects is not sufficient or the company's properties cannot be located or it is difficult to seize the company's assets, seizure may be executed on the assets of the management, representative manager, branch manager, responsible person, capital owner or chairman of a foundation.

Paragraph (2)

In appraising the value of seized property, a tax bailiff must take into account the quantity and the types of the property on the basis of fair prices, so that the tax bailiff cannot conduct seizure excessively. In certain circumstances it is possible for the tax bailiff to request the help of an appraiser.

Paragraph (3)

This provision is necessary to accommodate the possibility of expanding seizure objects to include other rights as referred to in Paragraph (1).

Article 15

(1) There shall be exempted from seizure movable property of the following:

a. clothes and beds and their equipment used by the Tax Bearer and his family embers who are his dependents;

b. supplies of foods and drinks for one month's need along with cooking utensils in the house;

c. the Tax Bearer's equipment which is official in nature endowed by the government;

d. books connected with the Tax Bearer's positions or jobs and tools used for education, culture and science;

e. equipment in good condition still used to implement daily jobs or businesses totaling not more than Rp20,000,000.00 (twenty million rupiahs); and

f. equipment for handicapped people used by the Tax Bearer and his family members who are his dependents.

(2) Changes in the value of the equipment as referred to in subparagraph e of Article (1) shall be stipulated by the Minister or head of regional government. (2a) Seized property which is fragile or easily rotten shall be excluded from auction sale.

(3) Addition in the types of movable property exempted from seizure as referred to in article (1) subparagraphs a, b, c, d, and f shall be regulated in a government regulation.

Elucidation of Article 15

Definition of food and drink shall include medicine consumed/taken in the event the Tax Bearer or his family members are ill. On the other hand, medicine as merchandise shall not be included into objects that are excluded from seizure.

Article 16

Seized property shall be left with the Tax Bearer, except if according to the tax bailiff the said property must be kept at the office of the official or at another place.

Elucidation of Article 16

Although the control over seized property shifts from a Tax Bearer to the official, it shall be left to the Tax Bearer for safe keeping, for example in the case of land and buildings. However, there are cases in which property, owing to its nature or to certain considerations, is left for safe keeping in a bank or at a pawn office, or is kept at the office of the official, for example in the cases where the seizure objects are jewelry or electronic equipment.

Article 17

(1) Seizure of term deposits, savings, current account balance, giro, or other forms considered equal should be first implemented by blocking.

(2) In the event that seizure is conducted against the property whose ownership :s registered, the copy of the official report on the implementation of seizure shall lx-submitted to the government agency where the ownership of the said property is registered.

(3) In the event that seizure is conducted against immovable property whose ownership is registered, the tax bailiff shall submit the copy of the official report on the implementation of seizure to the local administration and the local district court to be announced according to the local custom.

Elucidation of Article 17

Paragraph (1)

Seizure of a Tax Bearer's properties kept in the bank in the form of term deposits, savings, account current balance, giro or other forms considered equal to this, shall be implemented by first introducing their blocking which reference to the provision on bank confidentiality pursuant to the prevailing acts.

Paragraph (2)

Seizure of property whose ownership is registered, such as a motorized vehicle, shall be notified to the police force of the republic of Indonesia. In the case of land, the National Land Agency shall be notified, while in the case of the seizure of a vessel with a certain gross volume, the Directorate General of Sea Transportation shall be notified. This notification is intended to ensure that a Tax Bearer of a tax due and tax collection fee as well as other fee shall not transfer the said seized property prior to the settlement. This notification is served by the presentation of the copy of the official report on the implementation of seizure.

Paragraph (3)

As for the seizure of immovable property, for example, land whose ownership has not been registered at the National Land Agency, official report on the implementation of seizure shall be presented to the local administration in order to be used as a basis for the issuance of a land history certification and to prevent the transfer of the said land. The presentation of the official report on the implementation of seizure to a district court is intended for the registration at the clerk of the district court. The district court and the local administration shall later announce the said seizure.

Article 18

(1) As for the property seized by the prosecutor's office or the police to be used as exhibits in a criminal case, the tax bailiff shall submit a Coerce Warrant attached with a letter of notification stating that the said property shall be seized for tax purposes ii the process of evidence establishment is completed and a ruling is made to the effect that the exhibits shall be returned to the Tax Bearer.

(2) The prosecutor's office and the police shall immediately notify the official issuing the Coerce Warrant that seizure should be immediately effected before the said property is returned to the Tax Bearer.

(3) In the event that the property seized by the prosecutor's office or the police is returned to the Tax Bearer without any notification to the official, seizure of the said property can still be implemented.

Elucidation of Article 18

Paragraph (1)

Sufficiently clear.

Paragraph (2)

This provision is intended to ensure that seizure can be implemented before the property is returned to the Tax Bearer.

In the event that the prosecutor's office or the police neglect to notify the official issuing a Coerce Warrant the plan to return the seized property to the Tax Bearer, they shall be subject to the imposition of a sanction pursuant to the prevailing acts.

Paragraph (3)

Sufficiently clear.

 

Article 19

(1) Seizure cannot be effected against property already seized by a district court or other authorized government agencies.

(2) As for the property already seized as referred to in article (1), the tax bailiff shall submit a Coerce Warrant to the district court or other authorized government agencies.

(3) The district court as referred to in article (2) in its next session shall stipulate that the said seized property shall be used as collateral for the settlement of a tax due.

(4) The other authorized government agencies as referred to in article (2) shall, after receiving the Coerce Warrant, turn the said seized property as collateral for the settlement of a tax due.

(5) A court district or other authorized government agencies shall determine the division of the proceeds from the sale of the said property based on the provision on the state's preemptive right regarding tax collection.

(6) The preemptive right regarding tax collection shall supersede all other preemptive rights, except with respect to:

a. case charges incurred merely because of a penalty requiring that certain movable or immovable property should be auctioned;

b. charges incurred to safe the said property;

c. case charges incurred merely because of auction and inheritance settlement.

(7) A ruling with a permanent legal force shall be immediately submitted by a district court to an auction office to be used as the basis for the apportionment of auction proceeds.

Elucidation of Article 19

Paragraph (1)

This provision is intended to confirm that a tax bailiff cannot seized all kinds of property seized by a district court or other authorized government agencies. Those referred to as other authorized government agencies shall be other government agencies also authorized to conduct seizure, for example, the Committee in charge of State's Receivership.

Paragraph (2)

The presentation of the copy of a Coerce Warrant by a tax bailiff to a district court or another authorized government agency is intended to allow the district court or another authorized government agency to determine that the seizure of the said property also applies as collateral for the settlement of a tax due set forth in the Coerce Warrant.

Paragraph (3)

After receiving the copy of a Coerce Warrant, the district court shall in its next session stipulate that the said seized property shall be used also as a security for the settlement of a tax due. Therefore, on the basis of the said stipulation made by the district court, other interested parties can officially learn of this.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Paragraph (6)

This paragraph provides the State's position as preference creditor who is given pre­emptive right in the objects belonging to Tax Bearer to be sold, except legal proceeding expenses that result purely from the sanction of auction of a movable or immovable object, expenses incurred to save the object in question or legal proceeding s expenses that result from auction or from a heritage settlement. The sales proceeds of objects belonging to Tax Bearer shall be used first to pay the above mentioned expenses and the remaining thereof shall be used to settle the tax payable.

Paragraph (7)

As a follow-up of a district court's stipulation determining that the division of the proceeds from the sale of the seize property should prioritize the preemptive right for tax collection, the district court shall immediately send its ruling, as soon as it has a permanent legal force, to the auction office to be used as the basis for the division of the proceeds from the auction.

Article 20

(1) In the event that a property is located outside the jurisdiction of the official issuing a Coerce Warrant, the official shall request that the official whose jurisdiction covers the place where the property is located to issue a notice of seizure of the said property, unless otherwise stipulated by the Minister or a head of region.

(2) In the event that a property is located afar from the domicile of the official but still within his jurisdiction, the said official may request that the official whose jurisdiction also covers the place where the property is located should help him by issuing a letter of instruction of the implementation of seizure.

(3) The official to whom a request for help is made as referred to in article (1) and (2) shall notify the implementation of the notice of seizure to the official making a request for help immediately after the implementation of seizure by sending him an official report on the implementation of seizure.

Elucidation of Article 20

Paragraph (1)

Principally, if the seized object is found outside the official's jurisdiction, he has to request for assistance from another official to issue notice on seizure on the object concerned. Notwithstanding the above mentioned provision, if in a given city there are several jurisdictions, and it has been stipulated by the Ministerial Decree or Decision of Head of Region, the official in question shall be entitled to issue notice on seizure and order the tax bailiff to execute seizure on the object found outside his jurisdiction without asking for assistance from the local official.

Example:

Under a Ministerial Decree, a tax bailiff of Jakarta Matraman Tax District Office shall be entitled to directly seize the object found within Jakarta Tanjung Priok Tax District Service Office without asking for assistance from the tax bailiff of Jakarta Tanjung Priok Tax District Office.

Paragraph (2)

This provision is intended to allow the official issuing a Coerce Warrant to be able to request the help of another official to issue a notice on seizure of property found afar from the domicile of the official concerned although it is still within his jurisdiction. For example, if the head of the tax district office for state/local government owned companies in Jakarta, whose jurisdiction encompasses the entire Indonesia, is going to seize the property owned by a Tax Bearer located in Kupang, he may request the help of the head of the tax district office of Kupang.

Paragraph (3)

Sufficiently clear.

Article 21

Additional seizure can be conducted if:

a. The value of the seized good as referred to in Article 14 article (1) is not adequate to pay the tax collection fee and tax due; or

b. The auction proceeds of the seized goods is not adequate to pay the tax collection fee and tax due.

Elucidation of Article 21

This provision provides that tax bailiff shall be entitled to seize a property of Tax Bearer that found or known later if the value of the property that seized earlier is not sufficient to pay the outstanding tax due or tax billing expenses. Hence, seizure may be executed more than once till the adequate amount to settle tax payable and billing expenses before or after the auction is executed.

Article 22

(1) The removal of seizure shall be conducted if a Tax Bearer pays the tax collection fee and tax due or based on the court decision or the decision of tax court or otherwise stipulated by decree of the Minister or the head of regional government.

(2) The removal of seizure as referred to in article (I) shall be implemented based on a letter on the removal of seizure issued by the official.

(3) In the event seizure is executed to a property the ownership of which is registered, the copy of seizure removal letter shall be transmitted to the agency where the property concerned is registered.

Elucidation of Article 22

Paragraph (1)

This provision authorizes the Minister or a regional head to remove seizure because of reason beyond the power of the official concerned, for example in cases where a seizure object is burnt, lost, or destroyed. Referred to, as a court ruling shall be the decision of a judge in a public judicature. The ruling of a public judicature is for example a ruling on the lawsuit filed by a third party against the ownership of seized property, while the decision of the Tax Court is, for example, a decision on the lawsuit filed by a Tax Bearer against the implementation of seizure.

Paragraph (2)

Subparagraph a

This provision provides that the agency where the object is registered knows that seizure of the object is cancelled so that the control of the object is returned to Tax Bearer.

For example:

In case of land and building seizure, copy of notice of seizure removal shall be submitted to National Agrarian Agency/Agrarian Office.

Article 23

A Tax Bearer shall be prohibited to:

a. Transfer the right over seized property or transfer, lease, lend, hide, loose, or damage the seized property;

b. Convey a mortgage on the seized property for the settlement of a certain debt;

c. To fiduciary pledge a mortgage of or collateral for debt security of said movable objects; and/or

d. Damage, take off, or loose seizure seal or copy of Report on the implementation of Seizure or stuck on the seized property.

Elucidation of Article 23

Paragraph (1)

As the control of seized object has been transferred by Tax Bearer to the official, the Tax Bearer shall not be allowed to assign, hide, lose, transfer the right of seized object, for example by selling, bequeath, inheriting, donating it for religious purpose or contributing it to another party.

In addition, Tax Bearer shall not be allowed to encumber the seized object with collateral right for settling a given debt or lease it. Such prohibition shall be valid both for the whole or part of seized object.

Hiding means moving the seized object to another place so that the seized object is no longer found at the place specified in the official report of seizure.

Paragraph (2)

Sufficiently clear.

Article 24

A decision on the procedure for seizure shall be regulated in a government regulation.

Elucidation of Article 24

Sufficiently clear.

Article 25

(1) If a tax due or tax collection fee is not settled after the implementation of seizure, the authorized official shall implement the sale of the seized property by auction through an auction office.

(2) Seized property in the form of cash, term deposits, savings, account current balance, giro or other forms considered the equal, bonds, stocks, or other securities, receivables and capital participation shall be excepted from the sale by auction as referred to in article (1).

(3) Seized property as referred to in article (2) shall be used to settle the tax collection fee and the tax due in the following manner:

a. Cash shall be deposited to the state treasury or the regional treasury;

b. Term deposits, savings, account current balance, giro or other forms considered the equal, shall be book-transferred to the account of the state treasury or the regional treasury upon the request of the official to the bank concerned;

c. Bonds, stocks, or other securities traded at the stock exchange shall be sold in the stock exchange at the request of the official;

d. Bonds, stocks, or other securities not traded at the stock of exchange shall be immediately sold by the official;

e. As for receivables, an official report shall be drawn up regarding the approval of transferring the collection right from the Tax Bearer to the official;

f. As for capital participation in another company, a deed shall be made on the approval of transferring the right to sell from the Tax Bearer to the official

(4) In the event the sale is excluded from auction, tax collection fee shall be added by one percent (1%) from the sale proceeds as referred to in article (2).

(5) Provisions on the procedure for the sale of property excluded from the sale by auction as referred to in article (2) shall be regulated in a government regulation.

Elucidation of Article 25

Paragraph (1)

Although a Tax Bearer has settled his tax due, but if he has not settled the tax collection fee, the sale of the seized property by auctioning it may continue to be implemented.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Subparagraph a

Sufficiently clear.

Subparagraph b

The book-transfer of a seizure object kept in the bank in the form of term deposits, savings, account current balance, giro, or other forms considered equal to this, shall be implemented with reference to the provision on bank confidentiality pursuant to the prevailing acts.

Subparagraph c

Sufficiently clear.

Subparagraph d

Sufficiently clear.

Subparagraph e

Sufficiently clear.

Subparagraph f

Sufficiently clear.

Paragraph (4)

Inasmuch as that tax billing execution and sale of seized object is a long, complicated and risky proceeding, tax billing expenses amounting to one percent (1%) from sale proceeds shall serve as incentive for tax bailiff.

Paragraph (5)

Sufficiently clear.

Article 26

(1) Sale by auction of seized property as referred to in paragraph (1) of Article 25 shall be implemented at least 14 (fourteen) days after seizure by mass media, (la) Notice of auction as referred to in article (1) shall be made at least 14 (fourteen) days after the seizure. (Ib) Notice of auction for movable objects shall be made once (Ix) and for immovable objects twice (2x). (Ic) Notice of auction of any object, the value of which is not more than Rp20,000,000.00 (twenty million rupiahs) does not have to be announced through mass media.

(2) The official shall act as a seller of seized property and shall file an application for auction to the auction office prior to the auction.

(3) The official or his representative shall attend the auction to determine whether or not to dispose the auctioned property and sign the original copy of auction proceedings.

(4) The official and the tax bailiff shall not be permitted to purchase the seized property put on auction.

(5) The prohibition for the official and the tax bailiff to purchase seized property put on auction shall also apply to their spouses, family members of the same blood in a linear family line and adopted children.

(6) The official and the tax bailiff violating the provision as referred to in article (4) shall be subject to the imposition of a sanction pursuant to the prevailing acts.

(7) Change of object's value not necessarily published through mass media as referred to in paragraph (1) c shall be stipulated by Ministerial Decree or Decision of Head of Region.

Elucidation of Article 26

Paragraph (1)

This provision is intended to give an opportunity to a Tax Bearer to pay its tax due before an auction of the seized property is conducted. In accordance with auction regulation, every selling by an auction must be preceded by a Notice of Auction.

Subparagraph a

Sufficiently clear.

Subparagraph b

If immovable properties will be auctioned together with movable goods, Notice of Auction for immovable goods shall be issued twice consecutively, the first of which shall be conducted together with movable goods, so that the selling of movable goods can be prioritized.

Subparagraph c

The meaning of "not necessarily notified" by mass media is announced by means of pamphlets or an announcement put in a public area, such as village office or on an announcement board in the official' office.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

The presence of an official or his representative in an auction is necessary to determine whether or not to sell the property auctioned if the price offered by a prospective buyer is lower than the minimum price determined.

Besides, the presence of an official or his representative is also necessary to stop the auction if the proceeds is already sufficient to pay the tax collection fee and tax due.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Paragraph (6)

Sufficiently clear.

Paragraph (7)

Sufficiently clear.

Article 27

(1) Auction shall continue to be implemented although a decision has not been made on an objection filed by a Taxpayer.

(2) Auction shall continue to be implemented in the absence of a Tax Bearer.

(3) Auction shall not be implemented if a Tax Bearer has settled his tax due and the tax collection fee or if it so ruled by the court of act or by Tax Court or if auction object is damaged.

Elucidation of Article 27

Paragraph (1)

Having regard that an auction is a next step in executing a Coerce Warrant, which has a permanent legal power equal to what a court decision has, it still can be conducted although a Taxpayer submits an objection provided that the decision on it is not granted.

Paragraph (2)

Because the control of the seized properties is transferred from a Tax Bearer to an official, consequently, the official concerned has the authority to sell the said seized properties. Considering that a Tax Bearer who has the seized properties has been notified that the properties will be sold in an auction at the determined time, an auction still can be conducted without the presence of the Tax Bearer.

Paragraph (3)

Principally, an auction will not be conducted if a Tax Bearer has paid the tax due and the tax collection fee. However, if there has been a decision from the court which grants a claim by a third party on the ownership of the seized properties, or a decision of tax court which grants a claim by a Tax Bearer on the tax collection, or the seized properties are burnt or destroyed in a natural disaster, an auction still cannot be conducted although the tax due or the tax collection fee has not been paid.

Article 28

(1) Auction proceeds shall be used first to settle the tax collection fee unpaid and the remaining sum shall be used to pay the tax due. (la) In the case of auction sale, tax invoice as referred to in (I) shall be added by one percent (1%) of the principal price of auction.

(2) In the event that the auction proceeds reach a sufficient amount for the settlement of the tax collection fee and the tax due, the auction shall be terminated although there are still items to be auctioned.

(3) The remaining items and auction proceeds shall be returned by the official to the Tax Bearer immediately after the auction.

(4) Negligence on the part of the official to implement the provision as referred to in article (2) and (3) shall be subject to the imposition of a sanction pursuant to the prevailing acts.

(5) The right of a Tax Bearer over the property auctioned shall be transferred to the buyer, to whom auction proceeding shall be given as an authentic proof which shall be used as a basis for the registration and the transfer of the right.

Elucidation of Article 28

Paragraph (1)

Sufficiently clear.

Paragraph (la)

Having regard that a tax collection process up to the sale of the seized properties in an auction takes a long, complex and full of risks process, the tax collection fee amounting 1% (one percent) of the auction base is an incentive for a tax Bailiff.

Paragraph (2)

The main purpose of an auction is to pay the charge of tax collection fee and tax due by still giving a protection to a Tax Bearer so that an auction is not conducted excessively. In addition, this provision is intended to protect a Tax Bearer from the arbitrary conduct of an official in an auction. The official refunds the rest of the seized properties along with the surplus money from the auction to the Tax Bearer immediately after the issuance of an auction proceedings upon its conclusion.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

An auction proceeding includes, among others, the information that the seized properties are sold. As a condition of turning over of rights from the Tax Bearer to the buyer of the property and also as a legal protection over the rights of a buyer, the buyer must be given the auction proceeding which functions as a trade certificate which is an authentic proof as a base for registration and turn over of rights.

CHAPTER V

TRAVEL BAN AND CONFINEMENT

Article 29

Travel ban can be effected upon a Tax Bearer with minimum tax due of Rp 100,000,000.00 (one hundred million rupiahs) and not indicating good intention to settle his tax due.

Elucidation of Article 29

Travel ban shall be needed as one of the effort to collect taxes. However, to ensure that the implementation of travel ban shall not be conducted arbitrarily, the implementation of travel ban, as an effort to collect taxes, shall be subject to certain requirements. The requirements may be either quantitative, regarding the amount of the tax due, or qualitative, namely the Tax Bearer's good intention to settle the tax, so that travel ban shall be implemented very selectively and carefully.

Article 30

(1) The travel ban as referred to in Article 29 can be effected only based on a decree on travel ban issued by the Minister upon request of the official or the official's superior concerned.

(2) A decree on travel ban shall contain at least:

a. The identity of the Tax Bearer on whom travel ban shall be imposed;

b. The reason for the travel ban;

c. The period of travel ban.

(3) The period of travel ban as referred to in paragraph (2) c shall be a maximum of 6 (six) months and shall be extendible for a maximum of 6 (six) months.

(4) The decree of travel ban as referred to in paragraph (1) shall be presented to the Tax Bearer on whom travel ban is imposed, the Minister of Justice, the official requesting for travel ban, the superior of the official concerned and the local regional head.

(5) Travel ban may be effected against a number of persons as Tax Bearers of an entity or heirs.

Elucidation of Article 30

Paragraph (1)

Travel ban can be implemented only based on a decree by the Minister pursuant to the provision regulated in Law Number 9 of 1992 on immigration, stipulating among other things that the party authorized in and responsible for prevention shall be the Minister as far as this concerns state's receivership.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Article 31

Travel ban against a Tax Bearer shall not result in the waiving of a tax due and the termination of the implementation of tax collection.

Elucidation of Article 31

Based on the tax laws, a tax due shall be waived only if it is fully settled or the collection time limit is expired. Therefore, travel ban of a Tax Bearer shall not result in the waiving of the tax due. So, although travel ban is imposed on the Tax Bearer, a tax collection measure shall not stop and can continue to be taken.

Article 32

Travel ban shall be implemented based on the prevailing acts.

Elucidation of Article 32

Referred to, as the prevailing acts shall be Law Number 9 of 1992 on immigration.

Article 33

(1) Confinement can be conducted only against a Tax Bearer with a minimum tax due of Rp 100,000,000.00 (one hundred million rupiahs) and not showing good intention to settle his tax due.

(2) Confinement as referred to in paragraph (1) can be implemented only based on a order for confinement issued by the official after obtaining a written permit from the Minister or the governor/head of a first level region

(3) A maximum period of confinement is 6 (six) months and extendible to a maximum of 6 (six) months.

(4) The order for confinement shall contain at least:

a. The identity of the Tax Bearer

b. The reason for confinement

c. The permit for confinement

d. The period of confinement

e. The place of confinement

(5) Confinement cannot be conducted in the event that the Tax Bearer is performing his religious service or is attending an official session or is taking part in a general election.

(6) The amount of the tax due as referred to in paragraph (1) and in Article 29 may be changed by virtue of a government regulation.

Elucidation of Article 33

Paragraph (1)

Confinement shall constitute an effort to collect taxes in the form of temporary curbing of the freedom of a Tax Bearer by placing him at a particular place. In order that confinement is not arbitrarily implemented nor contradictory to common sense of justice, certain requirements are necessary. They are, among others, either quantitative, regarding the amount of a tax due, or qualitative, namely the good intention of the Tax Bearer to settle his tax due. In addition, this measure can be taken if tax collection process is implemented up to the issuance of a Coerce Warrant. Therefore, the official shall obtain accurate data or information needed as the material of the consideration in the filing of an application for confinement. Confinement shall be implemented selectively and carefully as a last resort.

Paragraph (2)

The requirement for a confinement of a permit from the Minister of the governor/head of a first-level region is intended to ensure that the confinement is implemented selectively and carefully. Therefore, the official may not issue a letter of instruction for confinement before obtaining a written permit from the Minister or the governor/head of a first-level region.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Paragraph (6)

Sufficiently clear.

Article 34

(1) A confined Tax Bearer shall be set free:

a. If the tax due and the tax collection fee have been settled;

b. If the period of time stipulated in the order for confinement has been elapsed;

c. Based on a court ruling with a permanent legal force; or

d. Based on certain considerations of the Minister or the governor/head of a first level region.

(2) Prior to release of the Tax Bearer as referred to in paragraph (1) a, c, and d, the official shall notify in writing the head of the confinement house as set forth in the order for confinement.

(3) A Tax Bearer taken hostage-of may file a lawsuit against the implementation of confinement only to a district court.

(4) In the event that the lawsuit of the Tax Bearer as referred to in paragraph (3) is granted and the court ruling has got a permanent legal force, the Tax Bearer may make a request for the rehabilitation of his reputation and the compensation for the period of confinement he has gone through.

(5) The compensation as referred to in article (4) shall amount to Rp 100,000.00 (one hundred thousand rupiahs) per day.

(6) Changes in the amount of the compensation as referred to in paragraph (5) shall be stipulated by the Minister.

(7) A Tax Bearer cannot file a lawsuit against the implementation of confinement if the period of confinement is over.

Elucidation of Article 34

Sufficiently clear.

Article 35

Confinement effected against a Tax Bearer shall not result in the waiving of the tax due and the termination of tax collection.

Elucidation of Article 35

Based on the tax laws, a tax due shall be waived if it is fully settled or if the collection time limit is expired. Therefore, confinement of a Tax Bearer shall not result in the waiving of a tax due. Hence, although a Tax Bearer has been confined, the tax collection measures shall not stop and can continue to be taken.

Article 36

Provision on the confinement house, the procedure for confinement, the rehabilitation of the reputation of a Tax Bearer and the provision of compensation shall be regulated in a government regulation

Elucidation of Article 36

Before the place for confinement is stipulated in a government regulation, a confined Tax Bearer shall be temporarily entrusted in the custody of a state detention house.

CHAPTER VI

LAWSUIT

Article 37

(1) A Tax Bearer's lawsuit against the implementation of Coerce Warrant, Notice of Seizure, or Notice of auction can be filed only to the Tax Court, (la) In the event that Tax Bearer's claim as referred to in paragraph (1) is accepted, Tax Bearer shall be entitled to ask for rehabilitation of his reputation and compensation to the official. (Ib) Amount of compensation as referred to in paragraph (1) a shall not exceed Rp5,000,000.00 (five million rupiahs). (Ic) Change of compensation amount as referred to in paragraph (1) b shall be stipulated by the Ministerial Decree or by the Decision of Head of Region.

(2) The Tax Bearer's lawsuit as referred to in paragraph (1) shall be filed within a period of 14 (fourteen) days after the implementation of the Coerce Warrant, Notice of Seizure or Notice of auction.

(3) Deleted.

Elucidation of Article 37

Paragraph (1)

This provision is intended to give rights to a Tax Bearer to file a lawsuit to the tax court if he does not agree with the tax collection process which covers the implementation of Coerce Warrant, Notice of Seizure, and Notice of auction.

Paragraph (la)

The request for compensation submitted by a Tax Bearer whose claim is granted to the official where a Coerce Warrant, Notice of Seizure, or Notice of auction is issued/implemented. The rehabilitation of reputation and compensation are only given in cash.

Paragraph (Ib)

Sufficiently clear.

Paragraph (Ic)

Sufficiently clear.

Paragraph (2)

The period of 14 days to file a lawsuit on a Coerce Warrant is counted since the notification of the Coerce Warrant to a Tax Bearer, on Notice of Seizure since the issuance of official report of seizure, and for Notice of auction since announced. Therefore, an auction cannot be conducted before 14 (fourteen) days elapse since the day of Notice of auction. If in the time ranges given a Tax Bearer does not file a lawsuit, the right of a Tax Bearer to file a lawsuit is aborted.

Paragraph (3)

Sufficiently clear.

Article 38

(1) A third party's lawsuit against the ownership of the seized property can be filed only to a district court.

(2) A district court receiving a letter of lawsuit as referred to in paragraph (1) shall notify the official in writing.

(3) After receiving the notification as referred to in paragraph (2), the official shall postpone the implementation of tax collection only with respect to the property whose ownership is subject to the lawsuit.

(4) A third parry's lawsuit against the ownership of the seized property cannot be filed after the auction has been conducted.

Elucidation of Article 38

Paragraph (1)

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Principally, a third party may submit a denial on the ownership of the properties seized by a tax bailiff through a process of civil case. However, if an auction official has decided a buyer as the winner of the progressing auction process, a denial can no longer be submitted on the ownership of the sold properties. It is intended to give a legal certainty and protect the interest of a buyer at an auction because a third party has already been given enough opportunity to submit a denial before an auction is carried out.

CHAPTER VII

SPECIAL PROVISION

Article 39

(1) A Tax Bearer can file an application for correction or compensation to the official with respect to a Notice of Prompt and Outright Collection, a Coerce Warrant, a Notice of Seizure, a Notice of Confinement. Notice of auction and a Notice of Minimum Pnce Determination which contain in their issuance an error or a mistake.

(la) The official shall within 7 (seven) days since the date of the acceptance of the

request as referred to in paragraph (1) make decision on the request so

submitted.

(Ib) If within the period as referred to in paragraph (1) a. the official does not give

any decision, the demand of Tax Bearer shall be considered to have been

accepted and the tax collection shall be temporarily suspended.

(2) The official may, ex-officio, correct the Notice of Prompt and Outright Collection, the Coerce Warrant, the Notice of seizure, the Order for Confinement and Notice of auction which contain in their issuance an error or a mistake.

(3) An action to implement tax collection shall resume after the mistake or the error has been corrected by the official.

(4) In the event that the demand as referred to in paragraph (1) is refused, tax collection shall continue in accordance with the original scheduled period.

Elucidation of Article 39

Paragraph (1)

This provision regulates the correction of mistakes or errors in name, address, Taxpayer Identification Number, amount of tax due, or other information in the Letter of Reprimand, Notice of Prompt and Outright Collection, Coerce Warrant, Notice of Seizure, Order for Confinement, and Notice of auction, Notice of Minimum Price Determination which the application is proposed by a Tax Bearer to the official. If the Tax Bearer proposes an application for a substitution of the letter concerned, either because of damage or a lost, or because of another reason, the substitution is given in a form of copy, which is signed by the official.

Paragraph (la)

Sufficiently clear.

Paragraph (I b)

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Article 40

(1) If, after the auction, a Taxpayer obtains a decision on his objection or an appeal ruling resulting in the reduction in the amount of the tax due so that there shall be overpayment of the tax, Taxpayer cannot ask for or shall not be entitled to demand for the return of the property already auctioned.

(2) Tax official shall return the amount in excess of tax payment as referred to in article (1) in cash pursuant to the prevailing acts.

Elucidation of Article 40

Paragraph (1)

This provision is intended to provide legal certainty and protection of rights for the buyer of seized properties in an auction.

Paragraph (2)

If a property owned by a Tax Bearer has been auctioned and then a decision on objection or an appeal is obtained, which results tax due becomes decreased or nil so that gives a surplus of tax payment, the surplus concerned can only be refunded in cash.

Article 41

Sufficiently clear.

Article 41

(1) Tax collection shall not be conducted if the time limit is elapsed as provided in laws and regional regulations.

(2) Submission of objection or a request for an appeal shall not defer the obligation to pay tax and the tax collection.

(3) The claim as referred to in paragraph (3) of Article 34 and in paragraph (1) of Article 37 shall not delay the process of tax collection.

Elucidation of Article 41

Sufficiently clear.

CHAPTER VII

A CRIMINAL PROVISIONS

Article 41A

(1) Tax bearer that violates the provisions as referred to in paragraph (1) of Article 23 shall be subject to imprisonment of 4 (four) years at the longest and penalty of Rp 12,000,000.00 (twelve million rupiahs) at the most.

(2) If the parties as referred to in paragraph (3) b, c, d, e, and f of Article 25 fail to execute their obligation, they shall be subject to imprisonment of 4 (four) months and 2 (two) weeks at the longest and penalty of RplO,000,000.00 (ten million rupiahs) at the most.

(3) Those who deliberately disobey instructions or requests issued pursuant to the law or deliberately prevent, impede or halt any action from fulfilling the provisions of the law taken by tax bailiff shall be subject to imprisonment of 4 (four) months and 2 (two) weeks at the longest and penalty of RplO,000,000.00 (ten million rupiahs) at the most.

Elucidation of Article 41A

Paragraph (1)

Sufficiently clear.

Paragraph (2)

Referred to as parties in Paragraph (3) subparagraph b of Article 25 are bank and other financial institutions, subparagraph c is stock exchange, subparagraph d is an official, subparagraph e are public notary, a debtor, and subparagraph f is a notary.

Paragraph (3)

Sufficiently clear.

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