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Jakarta, Ideatax -- 2 weeks ago, cyberspace has been enlivened with news about the Coldplay concert ticket war that will be held in November 2023. Millions of Coldplay fans in Indonesia are hunting for concert tickets for the British band. However, not everyone is lucky to get concert tickets for the band fronted by Chris Martin. In fact, one fan shared that he managed to get a ticket for 6 million including taxes after hunting by mobilizing all his devices for the ticket war (merdeka.com, 2023). However, is it true that music concert activities are taxed? In this article we will discuss the taxation of music concerts and other performances.
VAT on Music Performance
Article 4A paragraph (3) of Law Number 8 of 1983 concerning Value Added Tax (VAT) and Sales Tax on Luxury Goods (STLG) as amended by Law Number 7 of 2021 concerning Harmonization of Tax Regulations mentions that there are 17 types of services that are not subject to value added tax, one of which is arts and entertainment services.
Furthermore, in the explanation of the VAT Law, it is stated that arts services include all types of services performed by arts and entertainment workers. This is emphasized by the provisions of Article 2 paragraph (2) of the Ministry of Finance Regulation Number 158 of 2015 concerning the criteria for arts and entertainment services that are not subject to value-added tax, which regulates that those included in arts and entertainment services that are not subject to VAT include, among others, spectacles of art performances, spectacles of music performances, spectacles of dance and or spectacles of fashion performances.
Based on these provisions, it is clear that music concerts are not the object of value added tax or luxury goods sales tax. Thus, taxpayers should not make the mistake of assuming that Coldplay concerts are expensive because of VAT or STLG.
Local Tax Objects
Although music concerts or performances are not subject to VAT and STLG, Law No. 28 of 2009 on Regional Taxes and Levies (PDRD) as amended by Law No. 1 of 2022 on Central and Regional Financial Relations (HKPD) regulates that arts and entertainment services are objects of local goods and services tax (PBJT) levied by the city/regency government.
Furthermore, Article 55 of the HKPD Law regulates that what is included in arts and entertainment services include performances of art, music, dance and or fashion. However, there are arts and entertainment services that are exempted from local tax objects, including entertainment services held solely for: promotion of traditional culture for free, community service activities that are free of charge and other forms of entertainment arts regulated by local regulations.
It has been mentioned earlier that one of the objects of PBJT is arts and entertainment services. On the other hand, the subject of PBJT tax is the consumer of certain goods and services, in this case the audience of a concert or art performance. Meanwhile, the PBJT taxpayer is an individual or entity that conducts sales, delivery and or consumption of certain goods and services, in this case a concert or musical performance.
The HKPD Law regulates that the highest rate of PBJT (including tax on music performances) is 10%. To calculate the amount of PBJT, the taxpayer multiplies the rate as mentioned above with the tax base of the amount paid by the consumer of certain goods or services.
Regional Regulation of DKI Jakarta
Back to the Coldplay concert. Because the concert of the veteran band will take place at Gelora Senayan, the activity will become the object of DKI Jakarta's local tax. Jakarta Regional Regulation Number 3 of 2015 concerning Amendments to Regional Regulation Number 13 of 2010 concerning Entertainment Tax regulates that the object of entertainment tax is entertainment services for a fee, which includes performances of art, music, dance and or fashion.
There are three layers of tax rates imposed on art, music, dance and fashion performances:
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local/traditional class art performances, a local tax of 0% will be charged
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national class art performances, a local tax rate of 5% is charged
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international class art performances, local tax is charged at a rate of 15%
However, it should be noted that local regulation number 3 of 2015 was issued long before the law on Central and Regional Financial Relations was issued in 2022 and because the position of local regulations is lower than the law, the legal principle of lex superior derogat legi inferiori applies, which means that laws and regulations that have a lower degree in the hierarchy of laws and regulations must not conflict with higher ones.
Related Regulations
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Law No. 8 of 1983 on Value Added Tax and Sales Tax on Luxury Goods as amended by Law No. 7 of 2021 on Harmonization of Tax Regulations
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Law No. 28 of 2009 on Regional Taxes and Levies (PDRD) as amended by Law No. 1 of 2022 on Central and Regional Financial Relations (HKPD)
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Regulation of the Capital City of Jakarta Number 3 of 2015 concerning Amendments to Regional Regulation Number 13 of 2010 concerning Entertainment Tax
