The government has officially imposed a Specific Goods and Services Tax (PBJT) on certain entertainment services, including discotheques, karaoke, nightclubs, bars, and steam baths/spas. The tax rate set ranges from 40 percent to 75 percent, as stipulated in Law Number 1 Year 2022 on Financial Relations between the Central and Local Governments (HKPD Law).
Chapter 58 paragraph 2 of the HKPD Law outlines that the PBJT rate on entertainment services is set at a minimum of 40 percent and a maximum of 75 percent. This decision was taken with the consideration that entertainment services are generally only enjoyed by certain groups of people. The determination of the tariff limit aims to prevent competition to lower tax rates in order to increase business turnover, which can be detrimental to justice and public welfare.
Lydia Kurniawati Christyana , Director of Regional Taxes and Levies
Director of Regional Taxes and Levies, Lydia Kurniawati Christyana, explained that the tariff setting involves various parties, considers collection practices in the field, and emphasizes social justice, especially for community groups that require stronger economic support.
Arts and Entertainment Services PBJT is considered a local tax, and the HKPD Law authorizes Local Governments to set and adjust Local Tax and Retribution (PDRD) rates in accordance with economic conditions in their respective regions. The PBJT tariff range on entertainment services is set between 40 and 75 percent.
In addition, the HKPD Law also authorizes local governments to provide fiscal incentive facilities to support the ease of doing business and investing in their areas, in accordance with the provisions of Article 101 of the HKPD Law.
Although the implementation of this entertainment tax has drawn criticism, especially from entertainment industry players such as singer and karaoke entrepreneur Inul Daratista, Minister of Tourism and Creative Economy Sandiaga Uno tried to calm business players. According to him, the government will ensure that this policy will not harm the entertainment industry and will continue to strive to create business opportunities and employment.
Hotman Paris' response to the entertainment tax hike recently implemented by the government
This entertainment tax, which is regulated in the HKPD Law, has caused debate among entertainment entrepreneurs, including from well-known figures such as Hotman Paris. Nonetheless, the government promises to continue to open dialog with industry players and seek policy adjustments so that the entertainment sector remains strong and provides optimal economic benefits.
Here are some types of entertainment businesses that are taxed 40-75%
- Movie shows or other forms of audio-visual shows that are shown live in a certain location.
- Performances of art, music, dance, and/or fashion.
- Beauty contests and bodybuilding contests.
- Circus, acrobatics, and magic shows and exhibitions.
- Horse racing and motor vehicle racing.
- Agility games and sports games using special places, spaces, and/or equipment.
- Discotheque.
- Karaoke.
- Nightclub
- Bar.
- Steam bath or spa.
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