The Constitutional Court Granted Judicial Review on the Tax Court Law

On 25 May 2023, the Constitutional Court issued a substantial decision; Decision No. 26/PUU-XXI/2023 (“Constitutional Court Decision“) on the petition submitted by several Indonesian citizens who requested the Court to declare Article 5 paragraph (2) of the Law No. 14 of 2002 on Tax Court (“Tax Court Law”) as unconstitutional.


The petitioners, which consist of Mr. Nurhidayat (lawyer with expertise in handling tax disputes); Mr. Allan Wardhana (lecturer of constitutional law at Indonesian Islamic University – ”UII”); and Mr. Yuniar Hakiki (researcher at Center for Constitutional Law Studies at Faculty of Law of UII/PSHK UII) (“Petitioners”) submitted the petition on 28 February 2023 to the Constitutional Court.

The aforementioned Article 5 paragraph (2) of the Tax Court Law regulates as follow:

“Management of the organization, administration, and finance of Tax Court is conducted by the Department of Finance.[1]

Prior to the petition from the Petitioners, the Constitutional Court has conducted similar judicial reviews in which the Constitutional Court had issued Decision No. 10/PUU-XVIII/2020 and Decision No. 57/PUU-XVIII/2020. Under the Decisions, both judicial reviews were rejected due to the lack of legal standing and the unclear claim (obscure libel).[2]

In the Constitutional Court Decision, the Petitioners’ main grounds for their submission for judicial review were as follows:

a. The State Administrative Court is a judicial power that is authorized to adjudicate state administrative disputes. Legally, the State Administrative Judiciary can have specialized courts[3]. One of these specialized courts is the Tax Court, which is a part of the State Administrative Judiciary and the foregoing Court is under the management of the Supreme Court[4].

b. From the Petitioners’ perspective, there must be a clear separation between the executive and judicial powers in the management of tax dispute resolution in order to strengthen the independence of the judicial power. Without this independence, the Petitioner viewed that any dispute resolution by the Tax Court could be biased because it is under/being managed by the Ministry of Finance.

c. The Petitioners further submitted an opinion from the Indonesian civil procedural law expert, Yahya Harahap that placing the judicial power, e.g., the Tax Court, under the executive power may establish a symbolic juridical recognition that the judiciary institution is under the relevant Department, e.g. Ministry of Finance. This symbol gives the judges a certain indication of the limits of their autonomy in exercising the judicial functions and authorities. This is considered to be contrary to the independence of the judicial power as regulated under the Article 24 of the 1945 Constitution[5].

d. In addition to the above, the Petitioners argued that the Tax Court creates a major conflict of interest. This is because the directorate under the Ministry of Finance, i.e., the Directorate General of Taxes (“DGT”) is one of the parties that will become the defendant in the tax disputes. Moreover, the Tax Court’s Judges mostly are former DGT’s Officials. It can be assumed that there is a close relationship between the defendant and the Tax Court’s Judges.

The Petitioners’ prayer for relief includes that the Constitutional Court declare Article 5 paragraph (2) of the Tax Court Law to the phrase “Department of Finance” to be declared as conditionally unconstitutional with the 1945 Constitution and has no binding legal force, as long as it is not interpreted as “Supreme Court”.

Therefore, that the normative provision of Article 5 paragraph (2) of the Tax Court Law in full reads organizational, administrative and financial guidance for the Tax Court is carried out by the Supreme Court or to declare that the Tax Court Law is contrary to the 1945 Constitution and has no binding legal force until the enactment of a new regulation of the Tax Court Law.

The Constitutional Court Decision

The dictum of the Constitutional Court Decision are as follows:

a. To declare that Petitioner II has no legal standing to file petition in this case (due to lack of explanation regarding the loss of his constitutional rights as a lecturer of constitutional law);

b. To declare that Petitioner I and Petitioner III have legal standing to file petition in this case;

c. To declare that the phrase “Department of Finance” in Article 5 paragraph (2) of the Tax Court Law is contrary to the 1945 Constitution and has no binding legal force to the extent that it is not interpreted as “Supreme Court” which shall be gradually implemented no later than 31 December 2026″. Therefore, in full, Article 5 paragraph (2) of the Tax Court Law shall be read as follow: “Management of the organization, administration, and finance of Tax Court is conducted by the Supreme Court” which shall be gradually implemented no later than 31 December 2026″;and

d. To order that the publication of this decision in the State Gazette of the Republic of Indonesia as appropriate.

Constitutional Court’s Considerations

In granting the Petitioners’ petition, the main considerations of the Constitutional Court are:

a. Article 5 paragraph (2) of the Tax Court Law clearly combined the management of judicial institution under the executive power and thus, it can be interfered by the executive power.

b. Without the independence of the judicial power (or at least the potential influence from the executive power to the judicial institution), an abuse of power may arise inter alia the neglect of human rights / constitutional rights of citizens by the authorities.

c. Based on Article 1 paragraph (8) of the Judicial Power Law: “Specialized Court is the court which has the authority to examine, prosecute, and declare certain cases, the court of which can only be formed  within one of judicial institutions under the Supreme Court as regulated pursuant to the laws”.

Further, the elucidation of Article 27 paragraph (1) of the Judicial Power Law stipulates:

Specialized Court means inter alia juvenile court, commercial court, human rights court, corruption court, industrial relation court, and fishery court which are in the scope of general court, as well as the tax court which is in the scope of the state administration court”.

Given such provisions, the Court views that it is clear that the Tax Court is part of the judicial power as stipulated in Article 24 of the 1945 Constitution.

d. The authority given to the Ministry of Finance, specifically related to the organizational, administrative and financial management of the Tax Court, including the nomination and dismissal of the Tax Court’s judges, according to the Constitutional Court, has reduced the freedom of tax judges in examining and deciding tax disputes. Therefore, in order of honouring the Tax Court’s dignity and to establish the independency of judicial power, the Constitutional Court opined that it is appropriate for the Tax Court to be directed to form a “one roof (judicial) system”. This is also to be in line with the current practice wherein the other courts have been managed by the Supreme Court (and not by particular Ministry).

The Impacts

  1. The Tax Court is currently under “one roof (judicial) system” i.e. within the Supreme Court;
  2. The relevant stakeholders are required to prepare the relevant regulations including the relevant procedural laws by 31 December 2026 at the latest; and
  3. All matters of organizational management including the selection and appointment of judges, administrative and financial affairs of the Tax Court will be conducted entirely by the Supreme Court.


We view that the Constitutional Court Decision could serve as an improvement to the Indonesian judicial system, in particular to put an end of the presumed non-independency of the Tax Court and influence of the executive power to the judicial institution/the Tax Court.

Based on the DGT Performance Report of 2022, it is stated that the winning rate of the DGT in the first instance of tax disputes reached up to 73.90% and thus, in the tax dispute, most of the plaintiffs/taxpayers should pursued the next proceedings/the appeal.

Through the Constitutional Court Decision, it is expected for the Tax Court will be able to examine the cases with full independency that may assist the taxpayers in seeking justice. Further regulations and procedures are also anticipated to be issued by the relevant stakeholders. We will provide the related notable update (once available).


[1]The phrase of Department of Finance is referred to as the Indonesian Ministry of Finance.

[2]As decided in the Constitutional Court Decision No. 10/PUU-XVIII/2020 dated 18 August 2020 and No. 57/PUU-XVIII/2020 dated 1 September 2020.

[3]Article 4 of Law No. 5 of 1984 on Administrative Judiciary as amended Law by No. 9 of 2004.

[4]Article 25 paragraph (1) of Law No. 48 of 2009 on Judicial Power (“Judicial Power Law”).

[5] Budi Ispriyaso, 2019, “Penyatuan Pembinaan Pengadilan Pajak”, Administrative Law & Governance Journal Vol.2, Issue 4, p.656

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