At the start of the year, the central government announced that new legislation would be introduced that would see Indonesia’s entertainment taxes increase to 40-75 per cent.
Tourism leaders and entrepreneurs in Bali have been vocal about their concerns about the price hike and are calling for it to be scrapped.
The Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, has confirmed that the increase of the entertainment taxes has been postponed while an evaluation is underway so as not to harm the public, tourism, or small businesses.
Tourists and industry leaders can breathe a sigh of relief..for now. We’re not out of the woods just yet.
In a video posted to his Instagram profile, Minister Pandjaitan said, “We just want to postpone the implementation because it’s actually from the Commission. So [we have] decided to postpone it, we are evaluating.”
He added, “There is a judicial review at the Constitutional Court; I think we should consider that because we are siding with the ‘small’ people, because [this increase] concerns a lot of small traders too.”
The Minister also added that the review of the entertainment tax must take into consideration that the increased rates would apply to more than just nightclubs. He explained, “So entertainment taxes should not only be considered for discos. No, this is a lot; once again, it has an impact on others, people who prepare food, sell, and so on.”
For now, the entertainment tax will remain at the old rate of 15%, though the judicial review could come back and say that the variable 40-75% rate on entertainment businesses in Indonesia must go ahead.
The judicial review of the entertainment tax will explore the taxes applied to a far-reaching set of entertainment businesses.
Article 55 of Law 1/2022 includes taxations applied to viewing films or other forms of audio-visual spectacles that are shown live at a certain location, art, music, dance, and/or fashion performances.
This includes and is not limited to beauty contests, bodybuilding contests, and exhibitions such as circus, acrobatic, and magic shows.
This is followed by the taxes applied to horse racing and motor vehicle competitions, sports games and venues, equipment and supplies for sports and fitness, recreational water rides, ecological rides, educational rides, cultural rides, snow rides, game rides, fishing, agrotourism, and zoos.
It also includes massage and reflexology parlors, steam baths, and spas.
As for discos, karaoke, nightclubs, bars, and steam baths/spas, the government wants to update the policy by setting a lower limit of 40 percent and an upper limit of 75 percent.
Regency leaders in Bali are already discussing loopholes that would allow local businesses on the island to reduce their tax contributions legally.
Regional Secretary for Badung, Adi Arnawa, told reporters, “We are trying to formulate a legal instrument to help with the objections of tourism actors according to the Regent’s orders to me by looking for legal loopholes in order to mitigate in accordance with our fiscal policy.”
With all this pressure being applied and plenty of publicity about the very unpopular tax increase, there are hopes from the public, tourists, and entertainment industry stakeholders that this judicial review will come to a more agreeable conclusion.
Leaders are also keen to ensure that spas are not categorized as entertainment venues, a move many fear would decimate the wellness industry in Bali.
The Chairman of the Indonesian Association of Hospitality Leaders, Ketut Swabawa, said, “We hope that this increase will be [scrapped] and the judicial review will be carried out.”
“There is an error in the definition of spas if they are included in the category of recreation and public entertainment. Therefore, revisions need to be made so that this does not continue like that.”
Source: The Bali Sun
