So Polemic, Luhut Says The 40-75 Percent Entertainment Tax Will Be Postponed

Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan (Photo: Doc. VOI)

Coordinating Minister for Maritime Affairs and Investment (Menko Marves) Luhut Binsar Pandjaitan responded to the polemic of the increase in the Tax on Certain Goods and Services (PBJT) for entertainment services by 40-75 percent.

Luhut said the government would postpone the implementation of the law after holding a meeting with related parties, including one of the Governors of Bali.

"Indeed, I heard that when I was in Bali yesterday and I immediately gathered agencies related to the matter, including the governor of Bali and so on. So, we just want to postpone the implementation," Luhut said in a video caption on his official Instagram account @luhut.pandjaitan quoted Thursday, January 18.

He considered that the law did not come from the government, but from Commission XI DPR-RI. Therefore, Luhut said that judicial reviews submitted by a number of parties would also be taken into consideration by the government in implementing the entertainment tax.

"So, it's not from the government, it keeps going like that. So, yesterday we decided to postpone it, we evaluated it and then there was also a judicial review to the Constitutional Court, right," he said.

According to Luhut, the increase in taxes will have an impact on many parties, including small traders. He said, there are many workers whose sources of income depend on entertainment service providers, both small and medium scale.

Therefore, Luhut assessed that there was no urgency to increase the actual tax.

"This has many more (impact) impacts on others, people who prepare food, sales and so on. I think I am very pro with that and I do not see the reason for us to raise taxes from there," he added.

The Ministry of Finance (Kemenkeu) plans to hold a meeting with business actors to discuss certain service tax (PBJT) for arts and entertainment or entertainment tax, together with the Ministry of Tourism and Creative Economy (Kemenparekraf).

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, nightclubs and bars taxes.

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.