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Jakarta, Ideatax -- The government is planning to raise the entertainment tax! Law No. 1 of 2022 on Financial Relations between Central and Local Governments stipulates that taxes on certain goods and services or Pajak atas Barang dan Jasa Tertentu (PBJT) on entertainment services such as discotheques, karaoke, nightclubs, bars and steam baths/spas are subject to local taxes at a minimum of 40% and a maximum of 75%. In fact, according to the previous provisions there is no minimum limit of local tax on the entertainment industry. The prior provision referred to is Law No. 28/2009 on Regional Taxes and Retribution.
The Coordinating Minister for the Economy, Erlangga Hartarto, revealed that one of the reasons behind the increase in local taxes on the entertainment industry is because the tourism sector is considered to be improving after the COVID-19 pandemic (CNBC 2024).
The Central Bureau of Statistics reports that in 2022, Indonesia's domestic tourism sector has improved. It is indicated by the increase in the domestic tourist number in 2022 by 19.82% compared to 2021. Even the increase in domestic tourist numbers during the pandemic reached 80.23 million trips (BPS 2023).
Law number 1 of 2022 concerning central and regional financial relations regulates that there are nine local tax objects collected by the district or city government, one of which is the Specific Goods and Services Tax (PBJT). PBJT is a tax paid by the final consumer on the certain goods and/or services consumption, such as food and beverages, electricity, hospitality services, parking services, and arts and entertainment services.
Furthermore, Law 1 of 2022 also regulates that there are twelve services included as entertainment services as referred to in PBJT, including movie shows, artistic performances, beauty contests, bodybuilding contests, exhibitions, circus performances, horse racing, agility games, recreation, massage and reflexology parlors and discotheques, karaoke, nightclubs, bars, and spas.
Regarding tariffs, Law No. 1 Year 2022 stipulates that specific PBJT tariffs for entertainment services in discotheques, karaoke, nightclubs, bars, and steam baths/spas are set at a minimum of 40% and a maximum of 75% through regional regulations. PBJT is payable where the sale, delivery, and/or consumption of specific goods and services carried out. Meanwhile, regarding the payable time, Law 1 Year 2022 stipulates that PBJT is payable at the time of payment, delivery, or consumption of specific goods and services.
The provisions stipulated in Law No. 1 of 2022 are further elaborated in Government Regulation No. 35 of 2023 on the general provisions of local taxes and retributions. Through these provisions, the government, among others, regulates that PBJT, including but not limited to arts and entertainment services, is collected based on the taxpayer's own calculation. Because the PBJT collection system uses self-calculation by the taxpayer, the taxpayer has the obligation to submit a local tax notification letter or Surat Pemberitahuan Pajak Daerah (SPTPD). SPTPD, as mentioned above, covers all types of taxes and at least contains business turnover and the amount of tax payable per type of tax in one tax period.
Although the local tax on entertainment services is set at a minimum of 40% and a maximum of 75% through local regulations, Law No. 1 of 2022 and Government Regulation No. 35 still leave room for discussion. Law No. 1 of 2022 stipulates that the government, in accordance with national priority programs, can adjust the local tax rates stipulated through local regulations on taxes and/or retribution. Furthermore, the provision also regulates that the adjustment of local tax rates as intended is regulated through a presidential regulation that at least contains national strategic projects that receive tariff adjustments, the types of taxes to be adjusted, the amount of tariff adjustments, the entry into force of tariff adjustments, the period of tariff adjustments, and the regions that make tariff adjustments. Thus, if a local taxpayer objects to the amount of entertainment tax, the taxpayer can file a lawsuit with the state administrative court.
Above is a little discussion related to the local tax dispute. Provisions related to local taxes can be found in each regional regulation. In substance, the technical regulation of local taxes is regulated through regional regulations.
References
BPS. 2023. Badan Pariwisata Domestik Indonesia 2022. Mei 22. Accessed Januari 21, 2024. https://www.bps.go.id/id/pressrelease/2023/05/02/2041/pemulihan-pariwisata-domestik-indonesia-2022-.html.
CNBC. 2024. Pajak Hiburan Tetap Sampai 75%, Pemerintah Siapkan Insentif Fiskal. January 20. Accessed January 21, 2024. https://www.cnbcindonesia.com/news/20240120211431-4-507522/pajak-hiburan-tetap-sampai-75-pemerintah-siapkan-insentif-fiskal.
