Jakarta, CNBC Indonesia – The entertainment tax rates stipulated in the Financial Relations Law between the Central Government and Regional Governments (HKPD Law) have received protests. Starting from industry players to the famous lawyer Hotman Paris and dangdut singer Inul Daratista, who is also the owner of the Inul Vizta karaoke place.
Inul protested because she thought that the tariff stipulated in the HKPD Law was a minimum of 40% and a maximum of 75%, a rapid increase from what she had previously known was 25%. Hotman also assessed that the new tariff could kill the tourism sector. Hotman is known to have been a shareholder in Hollywings.
“Entertainment tax has increased from 25% to 40-75% if you don't obey the rules, you want to invite mods!!!!” wrote Inul, quoted from the X account @daratista_inul, Monday (15/1/2024).
So what are the actual entertainment tax rates regulated in the HKPD Law and previous provisions?
Referring to the HKPD Law Number 1 of 2022, entertainment tax is categorized as an object for certain goods and services tax (PBJT). In Article 58 of the Law, the PBJT rate is set at a maximum of 10%. However, specifically PBJT rates for entertainment services at discos, karaoke, nightclubs, bars and steam baths/spas are set at a minimum of 40% and a maximum of 75%.
The basis for imposing PBJT is the amount paid by consumers of certain goods or services. In the event that there is no payment, the basis for imposition of PBJT is calculated based on the selling price of similar goods and services applicable in the area concerned. PBJT in the law is collected by the district or city government.
Compared to the old provisions regulated in the Regional Tax and Regional Retribution Law (UU PDRD) Number 28 of 2009, entertainment tax is also a type of district/city tax. However, it does not use the term PBJT in its grouping as in the HKPD Law.
Article 45 of the PDRD Law only states that the entertainment tax rate is set at a maximum of 35%. Especially for entertainment in the form of fashion shows, beauty contests, discos, karaoke, nightclubs, stunt games, massage parlors, and steam baths/spas, the Entertainment Tax rate can be set at a maximum of 75%, without mentioning a minimum rate limit as in the HKPD Law.
According to the Research Manager of the Center for Indonesia Taxation Analysis or CITA, Fajry Akbar, the determination of the minimum entertainment tax rate limit in the HKPD Law is what makes it difficult for business actors in the entertainment sector, and makes it confusing for regions to determine entertainment tax rates that are in accordance with the industrial climate and economic conditions of the collecting area. .
“Because there is a minimum provision of 40% in the HKPD Law, everyone is confused, entrepreneurs are shouting too high but the regional government can't do much because the HKPD Law stipulates a minimum of 40%,” said Fajry to CNBC Indonesia.
Because the tariff is regulated by law, Fajry emphasized that it also makes adjustments to the minimum tax rate difficult to change. The only option available for change is a judicial review at the Constitutional Court as carried out by a number of associations affected by this regulation.
Executive Director of the Pratama-Kreston Tax Research Institute (PK-TRI) Prianto Budi Saptono added that the options that regions have to bear to adjust rates according to economic conditions have become very minimal, in fact there is only a complete tax exemption or a 40% tariff burden remaining.
“The tariff amount of 40% -75% is a political decision between the DPR and the central government in accordance with Article 23A of the 1945 Constitution,” emphasized Prianto.
“If the regional government (district/city) doesn't agree, they can't reduce the tariff range because it is already regulated in the HKPD Law. At the very least, they (the regent/mayor and DPRD) can agree not to apply the entertainment tax,” he said.
According to Prianto, if regional governments are pressured to make a decision to implement a minimum tariff of 40% then they have to look for substitutions to fill the original regional income (PAD) in each city/district. There are only two considerations, tax has a budget function to increase APBN/APBD revenues, and/or a regular loan function to regulate people's behavior.
“Indeed, this tariff is quite high, so it has the potential to reduce public consumption of entertainment. However, this tariff only applies to entertainment services in the form of discotheques, karaoke, nightclubs, bars and spas. In other words, the entertainment tax rate other than the above is still 10 the highest %,” he stressed.
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