Business Aspects of Golf Courses

Jakarta, Ideatax -- The Minister of Finance Regulation that stipulates the tax on natura or enjoyment has been issued. Through Minister of Finance Regulation Number 66 Year 2023 concerning Income Tax Treatment on Reimbursement or Reward in Connection with Work or Services Received or Obtained in the Form of Natura and/or Enjoyment, among others, it is regulated that natura and/or enjoyment with certain types or limits are exempted from the imposition of Income Tax.

Furthermore, the attachment to the Minister of Finance Regulation also specifies that the provision of sports facilities other than golf, horse racing, motorized boat racing, paragliding and automotive sports as long as they are received by employees and the value does not exceed Rp 1.500.000, are exempted from the imposition of Income Tax.

For example, Mr. Big is an Operational Director of PT X. For his position, Mr. Big gets a golf course membership facility as a reward in connection with work. For the enjoyment in the form of golf membership facilities provided by the company, PT X is obliged to withhold Income Tax Article 21 on the right to use the golf course facilities received.

Another example is Mrs. Cindy provides actuarial services to PT Y during 2020. In return for the services provided, PT Y provides enjoyment in the form of golf club membership facilities for one year. The enjoyment in the form of golf course facilities is the object of Income Tax Article 21 and PT Y is obliged to withhold Income Tax Article 21.

Based on the explanation above, it is clear that the regulation of natura and/or enjoyment in the form of golf facilities regardless of value is the object of Income Tax Article 21 and must be withheld by the facility or natura provider. However, how is the tax treatment from the golf course manager's side? What taxes are imposed on golf business? Here is the explanation.

DGT regulates the Income Tax treatment of golf course business income in the Decree of the Director General of Taxes Number KEP-564/PJ./2021. Through this regulation, DGT, among others, regulates that there are eight types of income that are the object of Income Tax on golf course business, including:

1. Entrance fee

The entrance fee is a mandatory contribution that must be paid by prospective members and is non-transferable or non-refundable.

1. Membership Deposit

Membership Deposit is a security deposit that must be paid by prospective members which can take the form of:

• Permanent Deposit, a security deposit that will not be returned to members. Included permanent deposit is a security deposit that is not determined with certain period and or the amount of return.

• Refundable Deposit, a security deposit that will be returned to members after a certain period of time, in full or after a certain amount of deductions.

• Playright Fee, a security deposit that will be returned to members after a certain period of time, after being subject to deductions in a certain amount according to the useful life that has been used.

1. Membership fee

Membership fee is a mandatory fee that must be paid by members, which can be in the form of monthly or annual fee.

1. Green fees, including prepaid green fees.  

Green fee is a fee charged to golfers to be able to play on the golf course. Whereas Prepaid Green Fee is a prepaid green fee for a useful life of 1 (one) year.

1. Caddie fee is a fee charged to golfers to play on the golf course.

Caddie fee is a fee charged to golfers for the use of caddie services in accompanying, carrying golf equipment and serving golfers during the game.

1. Golf car rent fee

Golf car rent fee is a fee charged to golfers for the use of golf vehicles during the game.

1. Membership rights transfer fee (transfer fee)

Transfer fee is an administrative fee charged to members who transfer their membership rights to the golf association to other parties;

1. Ball Money

Ball Money is a fee charged to golfers for the rental use of the golf practice field.

Although the Decree of the Director General of Taxes Number KEP-564/PJ./2011 has clearly regulated the types of income that become the object of income tax on golf course business, but this regulation also states that cash deposits received by golf course entrepreneurs from members who are also shareholders as a substitute for shares or substitute for participation, are not an object of income tax.

For example, Mr. Smith is a shareholder and member of the Sentul driving range golf club. In July 2023, Mr. Smith makes a cash deposit to the golf club in lieu of shares. This deposit is not an income tax object.

This is a brief explanation of the taxation aspects of the golf course business, further explanation can be found at Ideatax.

Related Regulations

• Law Number 7 of 1983 concerning Income Tax as Last Amended by Law Number 7 of 2021 concerning Harmonization of Tax Regulations

• Minister of Finance Regulation Number 66 of 2023 concerning Income Tax Treatment of Reimbursement or Reward in Connection with Work or Services Received or Obtained in the Form of Natura and/or Enjoyment

• Decree of the Director General of Taxes number KEP - 564/PJ./2001 concerning Income Tax Treatment of Taxpayers' Income from Golf Course Businesses