ANNEX 1.28 LAW OF THE REPUBLIC OF INDONESIA NUMBER 19 YEAR 1997 CONCERNING TAX COLLECTION WITH DISTRESS WARRANTS

Transcription

1 ANNEX 1.28 LAW OF THE REPUBLIC OF INDONESIA NUMBER 19 YEAR 1997 CONCERNING TAX COLLECTION WITH DISTRESS WARRANTS

2 LAW OF THE REPUBLIC OF INDONESIA NUMBER 19 YEAR 1997 CONCERNING TAX COLLECTION WITH DISTRESS WARRANTS BY THE GRACE OF GOD THE ALMIGHTY PRESIDENT OF THE REPUBLIC OF INDONESIA Considering : a. that the State of the Republic of Indonesia is a law based state based on Pancasila and the Constitution of 1945 and aimed at translating into reality a just and prosperous, secure, peaceful and orderly life of the state and the nation, and guaranteeing equal legal position of all community members, b. that to achieve this objective, national development which is carried out continuously, sustainably and equitably across the country needs huge funds which must be obtained particularly from our own sources. c. that in the framework of this principle of independence, the role of the community in fulfilling obligations in the taxation area must continue to be promoted by bolstering their awareness, understanding and comprehension that taxes shall constitute the main sources of financing for the state and national development and shall also constitute one of the state's obligations so that every community member shall be obligated to play an active role in performing their tax obligations; d. that in the implementation of tax laws, there are often tax debts which taxpayers fail to settle properly so that it is necessary to take a collection measure which shall have a coercive legal force; e. that Law No. 19/1959 on the collection of state taxes with distress warrants (Statute Book No. 63/1959 and Supplement to Statute Book No. 1859) cannot fully support the implementation of the prevailing tax law be-cause the national legal system has developed and the life of the community has become dynamic so that it is necessary to have a law on tax collection which can provide legal certainty and a sense of justice and also boost the community's awareness and compliance in fulfilling their tax obligations; f. that on the basis of the consideration referred to in letters a, b, c, d and e, it is deemed necessary to replace Law No. 19/1959 on the collection of state taxes with distress warrants (Statute Book No. 63/1959 and Supplement to Statute Book No. 1850); In view of: 1. Article 5 paragraph (1) and Article 20 paragraph (1) of the Constitution of 1945; 2. Law No. 6/1983 on general provisions on and the procedure for taxation (Statute Book No. 49/1983, Supplement to Statute Book No. 3262), as already amended by Law No. 9/1994 (Statute Book No. 59/1994, Supplement to Statute Book No. 3566); With the approval THE HOUSE OF PEOPLE'S REPRESENTATIVES OF THE REPUBLIC OF INDONESIA DECIDES

3 To stipulate: LAW ON TAX COLLECTION WITH DISTRESS WARRANTS CHAPTER I GENERAL PROVISIONS Article 1 Referred to in this law as: 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 prevailing laws; 2. A taxpayer shall be an individual or a body that pursuant to the tax laws is stipulated to perform tax obligations, including a tax collector or a party withholding a certain tax; 3. A tax bearer shall be an individual or a body responsible for the payment of taxes, including a representative exercising the rights of and fulfilling the obligations of a taxpayer pursuant to the tax laws; 4. Bodies shall be forms of business companies encompassing limited liability companies, limited partnerships, other partnerships, state-owned companies or companies owned by regional administrations under whatever name and in whatever form, alliances, firms, commercial associations,, cooperatives, foundations or similar organizations, institutions, pension funds, permanent business forms, and other forms of business companies; 5. An official shall be one authorized to appoint and discharge a tax bailiff, issue a letter of instruction for out-right and automatic collection, a distress warrant, a letter of instruction for the implementation of confiscation, a letter of confiscation removal, an auction announcement, an auction cancellation, a letter of instruction for hostage taking and other necessary letters needed for the collection of taxes in connection with a tax bearer's failure to settle part or all of his/its tax debts pursuant to the prevailing laws; 6. A tax bailiff shall be the executor of a tax collection measure which shall encompass outright and automatic collection, the notification of a distress warrant, confiscation and hostage taking; 7. A district court shall be one whose jurisdiction encompasses the place where a tax collection measure is taken; 8. A tax debt shall be a tax which must still be paid, including an administrative sanction in the form of an interest, a fine or an increase as set forth in the tax decision or in similar letters on the basis of the tax laws; 9. Outright and automatic collection shall be a tax collection measure which is implemented by a tax bailiff against a tax bearer without waiting the maturity date of the payment and this shall include all tax debts of all types of taxes, tax periods and fiscal years; 10. A distress warrant shall be a letter of instruction to pay tax debts and tax collection fees; 11. Tax collection fees shall be the fees incurred for the implementation of distress warrants, letters of instruction to implement confiscation, auction announcement, auction cancellation and other expenses in connection with tax collection; 12. Confiscation shall be the act of a tax bailiff to take control of the property of a tax bearer in order to turn it into a security for the settlement of the tax debts pursuant to the prevailing laws; 13. An object of confiscation shall be the property of a tax bearer which can be turned into a security for a tax debt; 14. An auction shall be any sale of property before the public by means of oral or written bidding by means of gathering interested parties or prospective buyers; 15. An auction office shall one authorized to undertake sale through auction;

4 16. 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 laws; 17. Prevention 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 reasons pursuant to the prevailing laws; 18. Hostage-taking shall be temporary restraint of the freedom of a tax bearer by placing him in a certain place; 19. A lawsuit shall he a legal effort regarding the implementation of tax collection and ownership of property as regulated in the prevailing laws; 20. Tax collection shall be a series of measures intended to make a tax bearer settle his/its tax debts and tax collection fees by serving him/it a reminder/a warning, implementing outright and automatic collection, notifying distress warrants, proposing prevention, implementing confiscation, implementing hostage-taking and selling confiscated property; 21. Property shall be any object or right which can be turned into an object of confiscation; 22. A regional head shall be a governor/head of first-level regional head, a district or a municipality head/head of a second-level regional head; 23. A regional administration shall be a regional administration whose jurisdiction shall encompass the place where a tax collection measure is taken; 24. The Minister shall be the Minister of Finance of the Republic of Indonesia. CHAPTER II 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 meant in sub-article (1) and sub-article (2) shall be authorized to: a. appoint and discharge a tax bailiff; b. issue: 1) a letter of instruction for outright and automatic collection; 2) a distress warrant; 3) a letter of instruction for the implementation of confiscation; 4) a letter of instruction for hostage-taking; 5) a letter on confiscation removal; 6) an auction announcement; 7) an auction cancellation; and 8) other letters necessary for the implementation of tax collection. Article 3 (1) A tax bailiff shall be appointed and discharged by the official. (2) The requirements, procedure for appointment and discharge as a tax bailiff shall be stipulated by the Minister. Article 4

5 Before assuming his position, a tax bailiff shall, before the official, say a vow or make a pledge in accordance with his religion or faith, reading as follows : I vow/pledge earnestly that I, in order to assume this position, do not directly or indirectly, using whatever name or means, give or promise something to anybody, 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 pledge or gift. I vow/pledge that I 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 law-and-justice-enforcing tax bailiff. (1) A tax bailiff shall be assigned to: Article 5 a. implement a letter of instruction for outright and automatic collection; b. notify a distress warrant; c. implement the confiscation of the property of a tax bearer on the basis of a letter of instruction for the implementation of confiscation; and d. implementing hostage-taking on the basis of a letter of instruction for hostage taking. (2) In implementing his tasks a tax bailiff must be completed with a tax bailiff identification card and he must show this to a tax bearer. (3) In implementing his tasks, 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 confiscation at a business place of the tax bearer and conduct confiscation at his domicile or at his residence, or at other places which may alleged as places where the objects of confiscation are kept. (4) In implementing his tasks, a tax bailiff may ask for the help of the police force, the prosecutor's office, the ministry 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 working area of the official, appointing him, unless otherwise stipulated by the minister of a regional head. Article 6 (1) A tax bailiff shall implement outright and automatic collection without awaiting the maturity date of the payment on the basis of a letter of instruction for outright and automatic collection issued by the official if: a. a tax bearer will leave Indonesia for good or intends to do so; b. a tax bearer terminates or actually reduce the activities of the company or the work he does in Indonesia or transfers the property he owns or controls; c. there are signs that a tax bearer will dissolve his business company or intends to do so; d. the state will dissolve the business company; or e. a third party confiscates the property of the tax bearer or there are signs of insolvency. (2) A letter for outright and automatic 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 debt; c. an instruction to make payment; and d. the time when the tax debt shall be settled.

6 (3) The letter of instruction for outright and automatic collection shall be issued prior to the issuance of a distress warrant. CHAPTER III DISTRESS WARRANT Article 7 (1) A distress warrant shall have as its heading the words of "FOR THE SAKE OF JUSTICE ON THE BASIS OF GOD THE ALMIGHTY" and shall have an equal executorial power and legal position as a court ruling with a permanent legal force. (2) A distress warrant shall contain at least: a. the name of the taxpayer, or the name of the taxpayer and the tax bearer, b. the amount of the tax debt; and c. an instruction to make payment. A distress warrant shall be issued if: Article 8 a. up to the maturity date of the payment the tax hearer fails to settle a tax debt and a letter of warning or a reminder or other similar letters have been issued to him; b. outright and automatic collection has been conducted against the tax bearer; or c. a tax bearer fails to comply with the provision as set forth in the decision on the approval for installments or postponement of tax payment. Article 9 (1) In the event that there arc circumstances beyond the power of the official, a letter in lieu of a distress warrant may be issued ex-officio by the official. (2) The letter in lieu of a distress warrant as meant in sub-article (1) shall have the same executorial power and legal position as a distress warrant as meant in Article 7 sub-article (1). Article 10 (1) A distress warrant shall be notified to a tax bailiff with a statement and a delivery of distress warrant to tax bearer. (2) The notification of a distress warrant as meant in sub-article (1) shall be expressed in an official report which shall contain at least the day and date of the notification of the distress warrant, the name of the tax bailiff, the name of the recipient and die place of notification of the distress warrant. (3) A distress warrant for an individual shall be notified by 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 lay bearer concerned cannot be found; c. one of Ins heirs or the executor of his testament or the undertaker taking care of his inheritance if the taxpayer is dead and the inheritance has not be divided; or d. all heirs, if the taxpayer is dead and his inheritance has been divided. (4) A distress warrant for a body shall be notified by a tax bailiff to: a. the executive board, shareholders and capital owners either at the domicile of the body concerned or at their residence or at other possible places; or

7 b. employees at the leadership level at the domicile or the business place of the body concerned if the tax bailiff cannot find any of those as meant in letter a. (5) In the event that a taxpayer is declared insolvent, a distress warrant shall be notified to the commissioner judge or the probate court and in the event that a taxpayer is declared to be dissolved and in liquidation, a distress warrant shall be notified to the person or the body assigned as liquidators. (6) In the event that a taxpayer appoints a proxy by virtue of a letter of special attorney to exercise tax rights and perform tax obligations, the distress warrant may be notified to the recipient of the said attorney. (7) If the notification of a distress warrant as meant in sub-articles (3) and (4) cannot be implemented, the distress warrant shall be conveyed through the local administration. (8) In the event that the residence, the business place or the domicile of a taxpayer or a tax bearer is unknown, the distress warrant" may be conveyed by means of sticking the distress warrant on the announcement board at the office of the official issuing k, announcing it through the mass media or in other ways stipulated by the Minister of a regional head. (9) In the event that a distress warrant must be implemented outside the working area of the official, the said official shall request for help from an official whose working area encompasses the place for the implementation of the distress warrant, unless otherwise stipulated by the Minister or a regional head. (10) The official from whom help is requested as meant in sub-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 fax bearer refuses to receive a distress warrant, a tax bailiff shall leave the said distress warrant and record in the official report that the tax bearer refuses to receive the distress warrant and the distress warrant shall be considered as having been notified. Article 11 The implementation of a distress warrant can not proceed with confiscation prior to the passage of 2 (two) times 24 (twenty four) hours after the distress warrant has been notified as meant in Article 10. CHAPTER IV CONFISCATION Article 12 (1) If a tax debt cannot be settled by a tax bearer within the period as meant in Article 11, the official shall issue a letter of instruction for the implementation of confiscation. (2) Confiscation shall be implemented by a lax bailiff in the presence of at least 2 (two) trustworthy adult residents of Indonesia known to the tax bailiff. (3) Every time confiscation is implemented, a tax bailiff shall draw up an official report on the implementation of confiscation, which shall be signed by the tax bailiff, the tax bearer and the witnesses. (4) Despite the absence of a tax bearer, confiscation can continue lo be implemented on condition that one of the witnesses as meant in sub-article (2) represents the local administration. (5) In the event that confiscation is conducted in the absence of a tax bearer as meant in sub-article (4), the official report on the implementation of confiscation shall be signed by the tax bailiff and witnesses. (6) The official report on the implementation of confiscation shall continue to have a binding force although (lie tax bearer refuses to sign the official report on the implementation of confiscation as meant in sub-article (3).

8 (7) The copy of the official report on the implementation of confiscation may be stuck on confiscated movable or immovable property, or at the place where the confiscated movable or unmovable property is found, and or at public places. (8) Confiscation seal may be stuck or placed on confiscated property. Article 13 The filing of an objection by a taxpayer shall not result in postponement of the implementation of confiscation. Article 14 (1) Confiscation may be conducted against the property of a tax bearer found at the tax bearer residence, business place or domicile or at other places, including that which is controlled by another party or on which a mortgage is conveyed as a security for the settlement of a particular debt in the form of; a. movable property, including automobiles, jewelry, cash and term deposits, savings, account current balance, giro or other forms considered equal to it, bonds, stocks or other valuable papers and capital participation at another company; and or b. unmovable property, including land, buildings and vessels of certain gross volume. (2) The confiscation as meant in sub-article (1) shall be implemented up to the extent of the value of the confiscated property being estimated sufficient to settle the tax debt and tax collection fees. (3) Other rights which may be confiscated other than those as meant in sub-article (1) shall be regulated in a government regulation. Article 15 (1) Movable property owned by a tax bearer excepted from confiscation shall be: a. clothes and beds and their equipment used by the tax bearer and his family members who arc 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; d. books connected with the tax bearer's position or job and tools used for education, culture and science; e. equipment in good working condition still used to implement daily jobs or businesses totaling not more than Rp 10,000,000 (ten 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 magnitude of the value of the equipment as meant in sub-article (1) letter e shall be stipulated by the Minister. (3) Addition in the types of movable property excepted from confiscation as meant in sub-article (1) letters a, b, c, d and f shall be regulated in a government regulation. Article 16 Already confiscated 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. Article 17

9 (1) Confiscation of term deposits, savings, account current balance, giro, or other forms considered equal to that shall be implemented by first introducing blocking. (2) In the event that confiscation is conducted against the property whose ownership is registered, the copy of the official report on the implementation of confiscation shall be submitted to the government agency where the ownership of the said property is registered. (3) In the event that confiscation is conducted against unmovable property whose ownership has not been registered, the tax bailiff shall submit the copy of the official report on the implementation of confiscation to the local administration and the local district court in order that it may be announced in a usual manner at that place Article 18 (1) As for the property confiscated by the prosecutor's office or the police to be used as exhibits in a criminal case, the tax bailiff shall submit a distress warrant to which shall be attached a letter of notification stating that the said property shall be confiscated if the process of evidence establishment has been completed and a ruling has been 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 distress warrant that confiscation should be immediately effected before the said property is returned to the tax bearer. (3) In the event that the property confiscated by me prosecutor's office or the police has been returned to the tax bearer without any notification to the official, confiscation of the said property can continue to be implemented. Article 19 (1) Confiscation cannot be effected against property already confiscated by a district court or other authorized government agencies. (2) As for the property already confiscated as meant in sub-article (1), the tax bailiff shall submit a distress warrant to a district court or other authorized government agencies. (3) The district court as meant in sub-article (2) shall in its next session shall stipulate that the said confiscated property shall be used as a security for the settlement of a tax debt. (4) The other authorized government agencies as meant in sub-article (2) shall, after receiving the distress warrant, turn the said confiscated property as a security for the settlement of a tax debt. (5) If court district or other authorized government agencies shall determine the division of the proceeds from the sale of the said property on the basis of the provision on the state's pre-emptive right regarding tax collection. (6) The pre-emptive right regarding tar. collection shall supersede all other pre-emptive rights, except wish respect to: a. case charges incurred merely because of a penalty requiring (hat certain movable or unmovable property should be auctioned; b. the charges incurred to save the said property; c. case charges incurred merely because of auctioning 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 {.he division of auction proceeds. Article 20 (1) In the event that a tax object is found outside the working area of the official issuing a distress warrant, the official shall request that the official whose working area encompasses the place where the tax object is found should help him by issuing a letter of instruction for the

10 implementation of confiscation of the said tax object, unless otherwise stipulated by the Minister of a regional head. (2) In the event that a tax object is found at a place located far from the domicile of the official but still within his working area, the said official may request that the official whose working area also encompasses the place where the tax object is found should help him by issuing a letter of instruction for the implementation of confiscation, (3) The official to whom a request for help is made as meant in sub-articles (1) and (2) shall notify the implementation of the letter of instruction for the implementation of confiscation to the official making a request for help immediately after the implementation of confiscation by sending him an official report on the implementation of confiscation. Article 21 Additional confiscation may be implemented if the proceeds from the auction of the property already confiscated are not sufficient for the settlement of the tax collection fees and the tax debt. Article 22 (1) Confiscation shall be removed if the tax bearer has settled the tax collection fees and the tax debt or if the Agency for the Settlement of Thx Disputes makes a decision to that effect or it is otherwise stipulated by the Minister or a regional head. (2) The removal of confiscation as meant in sub-article (1) shall be implemented on the basis of a letter on the removal of confiscation issued by the official. (1) A tax bearer shall be prohibited to: Article 23 a. transfer the right over confiscated property or transfer, lease, lend or damage the confiscated property; b. convey a mortgage on the confiscated property for the settlement of a certain debt; c. damage, remove or lose the copy of an official report on the implementation of confiscation or the confiscation seal stuck on the confiscated property. (2) A tax bearer violating the provision as meant in sub-article (1) shall be subject to the imposition of a criminal sanction pursuant to the prevailing laws. Article 24 A decision on the procedure for confiscation shall be regulated in a government regulation. Article 25 (1) If a tax debt or tax collection fees fail to be settled after the implementation of confiscation, the authorized official shall implement the sale of the confiscated property by auction through an auction office. (2) Confiscated property in the form of cash, term deposits, savings, account current balance, giro or other forms considered the same as that, bonds, stocks or other valuable papers, receivables and capital participation shall be excepted from the sale by auction as meant in sub-article (1). (3) Confiscated property as meant in sub-article (2) shall be used to settle the tax collection fees and the tax debt in the following manner: a. cash shall be deposited to the state's cash or the regional cash;

11 b. term deposits, savings, account current balance, giro or other forms considered the same as that, shall he book-transferred to the account of the state's cash or the regional cash at the request of the official to the bank concerned; c. bonds, stocks or other valuable papers traded at the stock exchange shall be sold in the stock exchange at the request of the official; d. bonds, stocks or other valuable papers 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) If the parties as meant in sub-article (3) letters b, c, d, e and f fails to carry out their obligations, they shall be subject to criminal sanctions pursuant to the prevailing laws. (5) Provisions on the procedure for the sale of property excepted from the sale by auction as meant in sub-article (2) shall be regulated in a government regulation. Article 26 (1) Sale by auction of confiscated property as meant in Article 25 sub-article (1) shall be implemented at least 14 (fourteen) days after confiscation. (2) The official shall act as a seller of confiscated property and shall file an application for auction to the auction office prior to the implementation of auction. (3) The official or his representative shall attend the implementation of auction to determine whether or not to let go of the auctioned property and sign the original copy of auction proceedings. (4) The official and the tax bailiff shall not be permitted to purchase confiscated property put on auction. (5) The prohibition to the effect that the official and the tax bailiff are not allowed to purchase confiscated 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 meant in sub-article (4) shall be subject to the imposition of a sanction pursuant to the prevailing laws. 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 debt and the tax collection fees or if it is so ruled by the court of law or by the Agency for the Settlement of Tax Disputes or if the auction object is destroyed. Article 28 (1) Auction proceeds snail be used first to settle the tax collection fees not vet paid and the remaining sum shall be used to pay the tax debt. (2) In the event that the auction proceeds reach a sufficient amount for the settlement of the tax collection fees and the tax debt, the auction shall be terminated although there are still items to be auctioned. (3) The items not yet -motioned and the amount remaining from the auction proceeds shall be returned by the official to the tax bearer immediately after the auction shall been implemented.

12 (4) Negligence on the part of the official to implement the provisions as meant in sub-articles (2) and (3) shall be subject to the imposition of a sanction pursuant to she prevailing laws. (5) The right of a tax bearer over the property already auction shall be transferred to the buyer, to whom auction proceedings shall be given as an authentic proof which shall be used as a basis for the registration and the transfer of the right. CHAPTER V PREVENTION AND HOSTAGE-TAKING Article 29 Prevention can be effected against a tax bearer whose tax debt amounts to a minimum of Rp 100,000,000.oo ( a hundred million rupiahs ) and whose good intention to settle hi? tax debt raises doubt. Article 30 (1) The prevention as meant in Article 29 can be effected only on the basis of a decree on prevention issued by the Minister at the request of the official or the official's superior concerned. (2) A decree on prevention shall contain at least: a. the identity of the tax bearer on whom prevention shall be imposed; b. the reason for effecting prevention; c. the period of prevention. (3) The period of prevention as meant in sub-article (2) letter c shall be a maximum of 6 (six) months and shall be extendible for a maximum of 6 (six) months. (4) The decree on prevention as meant in sub-article (1) shall be presented to the tax bearer on whom prevention is imposed, the Minister of Justice, the official making a request for prevention, the superior of the official concerned and the local regional head. (5) Prevention may be effected against a number of persons as tax bearers of a taxpayer in the form of a body or heirs. Article 31 Prevention against a tax bearer shall not result in the waiving of a tax debt and the termination of the implementation of tax collection. Article 32 Prevention shall be implemented on the basis of the prevailing laws. Article 33 (1) Hostage-taking can be conducted only against a tax bearer whose tax debt amounts to a minimum of Rp. 100,000, ( a hundred million rupiahs) and whose good intention to settle his tax debt raises doubt. (2) Hostage-taking as meant in sub-article (1) can be implemented only on the basis of a letter of instruction for hostage-taking 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 hostage-taking is 6 (six) months and is extendible to a maximum of 6 (six) months. (4) The letter of instruction on hostage-taking shall contain at least:

13 a. the identity of the tax bearer; b. the reason for hostage-taking; c. the permit for homage-taking; d. the length of hostage-taking; e. the place of hostage-taking. (5 Hostage-taking 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 debt as meant in sub-article (1) and in Article 29 may be changed by virtue of government regulation. (1) A tax bearer taken hostage of shall be set free: Article 34 a. if the tax debt and the tax collection fees have been settled; b. if the period of time stipulated in the letter of instruction for hostage-taking has been met; c. on the basis of a court ruling with a permanent legal force; or d. on the basis of certain considerations of the Minister or the governor/head of a first-level region. (2) Prior to the tax bearer being set free as meant in sub-article (1) letters a, c and d, the official shall notify in writing the head of the site for hostage-taking as set forth in the letter of instruction for hostage-taking. (3) A tax bearer taken hostage of may file a lawsuit against the implementation of hostage-taking only to a' district court. (4) In the event that the lawsuit of the tax bearer as meant in sub-article (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 length of hostage-taking he has gone through. (5) Changes in the amount of the compensation as meant in sub-article (5) shall be stipulated by the Minister. (6) A tax bearer cannot file a lawsuit against the implementation of hostage-taking if the period of hostage-taking is over. Article 35 Hostage-taking effected against a tax bearer shall not result in the waiving of the tax debt and the termination of the implementation of tax collection. Article 36 Provisions on the site for hostage-taking, the procedure for hostage-taking, the rehabilitation of the reputation of a tax bearer and the provision of compensation shall be regulated in a government regulation. CHAPTER VI LAWSUIT Article 37 (1) A tax bearer's lawsuit against the implementation of distress warrant, confiscation or auction can be filed only to the Agency for the Settlement of Tax Debts.

14 (2) The tax bearer's lawsuit as meant in sub-article (1) shall be filed within a period of 14 (fourteen) days after the implementation of the distress warrant, warrant, confiscation or auction announcement. Article 38 (1) A third party's lawsuit against the ownership of the confiscated property can be filed only to a district court. (2) A district court receiving a letter of lawsuit as meant in sub-article (!) shall notify the official in writing. (3) After receiving the notification as meant in sub-article (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 party's lawsuit against the ownership of the confiscated property cannot be filed after the auction has been conducted. CHAPTER VII SPECIAL PROVISIONS Article 39 (1) A tax bearer can file an application for correction or compensation to the official with respect to a letter of instruction for outright and automatic collection, a distress warrant, a letter of instruction for the implementation of confiscation, a letter of instruction for hostage-taking and auction announcement which contain in their issuance an error or a mistake. (2) The official may, ex-officio, put right the letter of instruction for outright and automatic confiscation, the distress warrant, the letter of instruction for the implementation of confiscation, the letter of instruction for hostage-taking and auction announcement which contain in their issuance an error or a mistake. (3) An action to implement tax collection shall be resumed after the mistake or the error has been put right by the official. Article 40 (1) If, after the implementation of auction, a taxpayer obtains a decision on his objection or an appeal ruling resulting in the reduction in the amount of the tax debt so that there shall be overpayment Of the tax, the taxpayer cannot ask for or shall not be entitled to demand for the return of the property already auctioned. (2) The official shall return the amount in excess of tax payment as meant in sub-article (1) in the form of money pursuant to the prevailing laws. Article 41 Tax collection shall not be conducted if it has expired as regulated in the prevailing laws on taxation. CHAPTER VIII TRANSITIONAL PROVISIONS Article 42 (1) The following is stipulated on measures taken to implement tax collection on the basis of Law No. 19/1959 on the collection of state taxes with distress warrants (Statute Book No. 63/1959 and Supplement to Statute Book No. 1850) but not yet brought to conclusion at the time of the enactment of this law:

15 a. in the event that a distress warrant has been issued but not yet notified to the tax bearer concerned, the.said distress warrant shall be declared as being canceled in the interest of the law; b. in the event that a distress warrant has been notified to the tax bearer concerned, the implementation of confiscation not yet processed shall be brought to conclusion on the basis of this law; c. in the event that a letter of instruction for the implementation of confiscation has been issued but not yet implemented, the said letter of instruction for the implementation of confiscation shall be declared as being canceled in the interest of the law; d. in the event that auction has been processed but not yet brought to conclusion, it shall be brought to conclusion on the basis of Law No. 19/1959 on the collection of state's taxes with distress warrants (Statute Book No. 63/1959 and Supplement to Statute Book No. 1850). (2) A tax bearer's lawsuit against the action to implement tax collection prior to January 1, 1998 shall be filed to the judicature agency concerned. CHAPTER IX CLOSING PROVISIONS Article 43 (1) With the enforcement of this law, Law No. 19/1959 on the collection of state's taxes with distress warrants (Statute Book No. 63/1959 and Supplement to Statute Book No. 1859) shall be declared null and void. (2) With the enforcement of this law, all enforcement regulations in the area of tax collection shall remain effective as far as they do not contradict this law or has not been replaced with new enforcement regulations. Article 44 This law is called Law on Tax Collection with Distress Warrants. Article 45 This law shall take effect as from the date of promulgation. For public cognizance, this law shall be promulgated by publishing it in the Statute Book of the Republic of Indonesia. Promulgated in Jakarta On May 23, 1997 THE MINISTER/STATE SECRETARY sgd. MOERDIONO Validated in Jakarta On May 23, 1997 THE PRESIDENT OF THE REPUBLIC OF INDONESIA sgd. SOEHARTO STATUTE BOOK OF THE REPUBLIC OF INDONESIA NUMBER 42 YEAR 1997