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Entertainment Tax Set at 40-75% with Fiscal Incentives, Says Minister Airlangga

23 January 2024 15:13 WIB

TEMPO.CO, JakartaIndonesian Coordinating Minister for the Economy Airlangga Hartarto stated that the government was preparing the fiscal incentives to address the controversy surrounding the surge in the entertainment tax for businesses such as discotheques, karaoke lounges, nightclubs, bars, and spas.

Airlangga clarified that there were no two tax incentives for certain types of entertainment tax. “The fiscal incentives are related to PPh (income tax),” he said in Tanah Abang, Central Jakarta on Tuesday, January 23.

He explained that his ministry, in tandem with the Finance Ministry, was reviewing the corporate income tax and planned to offer a 10 percent discount on the normal rate of 22%. This discount will bring the corporate income tax down to 12% for entrepreneurs. 

“This PPh is for the tourism sector, which has been one of the industries with the slowest recovery post-covid,” Airlangga added.

Meanwhile, the fiscal incentives offered by regional governments would differ. Airlangga said Article 101 of Law No. 1 of 2022 concerning financial relations between the central and regional governments or HKPD Law allows regional governments to offer incentives.

“The fiscal incentives, as referred to in Paragraph 1, are in the form of reductions, reliefs, and exemptions, or elimination of principal taxes, principal levies and/or sanctions,” reads the HKPD Law Article 101 (2).

This means that Airlangga reiterated that the regional government could provide an entertainment tax below 70 percent or even below 40 percent. This was also confirmed by the Home Affairs Minister’s Circular No. 900.1.13.1/403/SJ.

Several associations have objected to the 40-75 percent tax on entertainment establishments and have even filed a judicial review of the regulation. As a result, President Joko Widodo or Jokowi held a meeting with several ministers at the State Palace on Friday, January 19, to discuss the entertainment tax. On the same day, the Home Affairs Ministerial Decree was issued, confirming that regional governments could provide fiscal incentives.

AMELIA RAHIMA SARI | ANTARA

Editor's Choice: Indonesian Businesses Slam Govt Entertainment Tax Hike

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