Most business actors whose activities are engaged in the entertainment sector are protesting because the latest entertainment tax rate has increased significantly. One of them is dangdut singer and owner of Inul Vizta karaoke entertainment venue, Inul Daratista, who expressed her grievances regarding the planned increase in entertainment tax. In her X.com social media account, Inul said that she objected to the planned increase. “Entertainment tax rises from 25% to 40-75% sing nggawe rules want to invite modyar tah!!!!,” Inul wrote, quoted Sunday (1/14/2024). Inul also uploaded a video showing the condition of her karaoke located in South Jakarta. From the video, the karaoke place looks quiet. He mentioned, only about two to three rooms were filled with visitors. In fact, it was Saturday (1/13/2024). “We see the condition of my karaoke now. It’s Saturday, the conditions are quiet, there are not many guests and the tax here alone is 25%,” Inul said in the video. In the video, Inul also asked employees about the applicable tax. “Even with 25% tax, many guests complain, what if the tax rises by 70 percent, we will definitely get more complaints,” said one of Inul Vizta’s employees. So, what are the provisions of the tax rate in question and what sectors are affected?
Amended Entertainment Tax Rate Provisions
Information on the increase in entertainment tax rates is as stated in the provisions of Law Number 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments (Law 1/2022). Where as quoted from CNBC Indonesia on Wednesday (17/1/2024), the DKI Jakarta Provincial Government officially raised the tax rate for special entertainment, such as discotheques, karaoke, nightclubs, bars, and steam baths / spas by 40%. The tax rate is in accordance with the provisions for certain goods and services tax objects (PBJT) stipulated in the Law on Financial Relations between the Central Government and Regional Governments (HKPD Law). This special entertainment tax rate for PBJT has been enacted through Regional Regulation (Perda) Number 1 Year 2024. The regulation was signed by DKI Jakarta Acting Governor Heru Budi Hartono on January 5, 2024.
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Keep in mind, PBJT is a tax paid by the final consumer on the consumption of certain goods and services, including in the specialized entertainment services sector. The tax is collected by the district or city government.
Differences between Previous and Current Rates
The difference between the previous and current entertainment tax rates is quite significant, as explained below:
Old Tariff
Previously, provisions regarding tax rates were regulated in DKI Jakarta Provincial Regulation Number 3 of 2015. Where based on these rules, massage parlors and steam baths and spas are pegged at 35 percent. Meanwhile, the tax rate for discotheques, karaoke, and night entertainment in the form of clubs, pubs, bars, live music or music with Disc Jockey (DJ) and the like is 25 percent. In the past, the entertainment tax rate was also not set at a minimum limit. However, the local government may set the entertainment tax rate at a maximum of 35 percent. This is as stated in Article 45 paragraph (1) of Law Number 28 of 2009 concerning Regional Taxes and Levies (Law 28/2009). Meanwhile, for fashion shows, beauty contests, discotheques, karaoke, nightclubs, agility games, massage parlors, and steam baths/spas, the entertainment tax rate can be set at a maximum of 75 percent (Article 45 paragraph (2) of Law 28/2009).
New Tariff
As previously explained, currently the provisions on entertainment tax rates are regulated in Law Number 1 Year 2022. Where specifically for the entertainment services of discotheques, karaoke, nightclubs, bars and steam baths/spas, it is set at a minimum of 40 percent and a maximum of 75 percent. From this, it can be seen that there is a minimum provision for the imposition of entertainment tax rates (PBJT), which is 40 percent. This is considered very high by business people engaged in entertainment services.
What are the Affected Sectors?
The business sector that is most affected by the new minimum entertainment tax rate is the tourism sector or entertainment services business. Based on Article 55 paragraph (1) of Law 1/2022, arts and entertainment services that are the object of PBJT include:
- A movie or other form of audio-visual spectacle that is shown live at a specific location;
- Performances of art, music, dance, and/or fashion; Beauty contests;
- Bodybuilding contest;
- Exhibition;
- Circus, acrobatics and magic shows;
- Horse racing and motorized vehicle races;
- Agility game;
- Sports games using a place/space and/or equipment and supplies for sports and fitness;
- Recreational water rides, ecological rides, educational rides, cultural rides, snow rides, game rides, fishing, agritourism, and zoos;
- Massage and reflexology parlors; and Discotheques, karaoke, nightclubs, bars, and steam baths/spas.
KH Contact
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