Surprised About The 40 Percent Entertainment Tax, Bahlil: Disrupts The Business Climate And Quiet Consumers

JAKARTA - Investment Minister/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia said that an increase in entertainment tax rates to 40 percent could disrupt the business climate and investment in the country.

For your information, entertainment tax rates for discotheques, karaoke, nightclubs, bars and steam/spa showers are set to increase 40 percent to 75 percent. The tax is regulated in Law Number 1 of 2022 concerning Financial Relations of Central and Regional Governments (HKPD).

Bahlil admitted that he was surprised by the policy. In fact, the Coordinating Minister for Maritime Affairs and Investment (Menko Marves) Luhut Binsar Pandjaitan has also suggested that the policy be detained first.

"I'm also surprised by this entertainment tax. Indeed, this is disturbing. My feeling will have an unsuitable impact," Bahlil said at a press conference at the Ministry of Investment office, Jakarta, Wednesday, January 24.

Bahlil even said that if the tax imposed was that large, it would have an impact on the sustainability of the entertainment business. He also admitted that he was worried that there would be a decrease in the number of consumers.

"In my opinion, those who have experienced entertainment tax facilities before, it's expensive, no one wants to enter if it's expensive like this. So, yes, it's dangerous, the number of consumers is getting less and less at this," he said.

Therefore, Bahlil said the government chose to postpone the implementation of this entertainment tax increase as stated by the Coordinating Minister for Maritime Affairs and Investment (Menko Marves) Luhut Binsar Pandjaitan.

"But Mr. Luhut, Mr. Coordinating Minister, I have conveyed that it is held (delayed) first. Don't do it first, it still needs a study," he said.

For your information, the Government and the DPR have stipulated Law Number 1 of 2022 concerning Financial Relations of the Central Government and Regional Governments (UU HKPD), and further provisions of the HKPD Law have also been stated in Government Regulation Number 35 of 2023 concerning General Provisions for Regional Taxes and Regional Retribution.

The HKPD Law has stipulated that the regulation on the Specific Goods and Services Tax (PBJT) collected by the Regency/City, specifically for DKI Jakarta, is collected by the Province. This PBJT includes food and/or drinks, electricity, hospitality services, parking services, arts and entertainment services, with a maximum tariff of 10 percent, which was previously regulated in Law Number 28 of 2009 with a maximum tariff of 35 percent.

Meanwhile, PBJT Special on Entertainment Services at discotheques, karaoke, nightclubs, bars, and steam/spa baths, is subject to a minimum of 40 percent and a maximum of 75 percent.

Previously, with Law 28/2009 at the highest, it was only 75 percent, without minimum restrictions, so it could be below 40 percent.

The Entertainment Tax, which is a minimum of 40 percent, is borne by Customers, while the Entertainment Service Organizers are also subject to PPh Badan of 22 percent.

The imposition of the PBJT tariff which is only 2 years old since Law 1 of 2022 comes into effect on January 5, 2022 or January 5, 2024, which is regulated by each Regional Government.