The Implementation Of Entertainment Taxes Is Up To 75 Percent, Observers: There Must Be In-depth Discussions Between The Government And Business Actors

Illustration. (Photo: Doc. Antara)

JAKARTA - The Center for Economic Policy Research (PPKE) of the Faculty of Economics and Business (FEB) Universitas Brawijaya stated that the issue of implementing entertainment taxes ranging from 40 percent to 75 percent must be handled wisely.

University of Brawijaya PPKE senior researcher Joko Budi Santoso said that there needs to be in-depth discussions between the government and business actors to determine tax rates that do not damage the business climate.

"Of course, it must be handled wisely. Meeting together between local governments and business actors must be done to be able to determine rates that are not destructive to a conducive business climate," said Joko Budi, quoted from Antara, Wednesday, January 17.

Joko Budi explained that the determination of the entertainment tax of 40 percent to 75 percent as stated in Law Number 1 of 2022 concerning Financial Relations between the Central Government and the Regional Government (HKDP) will indeed increase Regional Original Income (PAD).

However, he continued, there was a further impact from the implementation of the tax rate, namely that it could kill the related business sector. Taxes of 40 percent to 75 percent will be imposed on the entertainment business sector of spa, discotheques, karaoke and bars.

"As an example, Malang City as a tourist destination, will also not be able to escape from the entertainment world as a complement to its attractiveness," he said.

He added, in setting the entertainment tax rate, local governments must consider economic conditions such as economic growth, inflation, people's purchasing power, including the ability of business actors.

"Therefore, communication and coordination as well as participatory in determining policies will be the key to determining tariffs that can be implemented smoothly," he said.

The Ministry of Finance plans to hold a meeting with business actors to discuss taxes on certain goods and services (PBJT) for arts and entertainment or entertainment taxes, together with the Ministry of Tourism and Creative Economy.

In Law Number 1 of 2022, it is stipulated that spas and karaoke are types of entertainment taxes that are subject to a lower limit rate of 40 percent and an upper limit of 75 percent, the same as types of discotheque tax, nightclubs, and bars.

The amount of the tariff considers that this type of entertainment is only enjoyed by certain groups of people, so the government sets a lower limit to prevent the competition for determining low tax rates in order to increase business turnover.

The tariff determination has considered input from various parties, including discussions with the House of Representatives (DPR). The Ministry of Finance is open if there are provisions that are not approved or need a judicial review.