New Indonesian entertainment tax on hold for time being

The Indonesian Tourism Industry Association (GIPI) has issued a circular letter recommending its members to continue using the old entertainment tax tariff while waiting for the judicial review result of the Ministry of Finance’s decision to raise the tax.

Speaking to the media, GIPI chairman Haryadi Sukamdani said: “We have submitted the (judicial review appeal) but we are projecting the process will take time as the Constitutional Court (is likely) to be busy handling national and presidential election-related complaints, therefore we recommend entertainment services affected by the new regulation to refer to the old tariff.”

GIPI has advised members to continue using the old entertainment tax tariff for now; nightlife in Bali, pictured

He explained this would help maintain the continuity of entertainment businesses, including discos, karaoke, nightclubs, bars and steam baths/spas, and minimise the impact of rate increases on demands.

He said: “Moreover, these sectors open up many job opportunities for the community. I must help my members. We don’t want to lose them.”

In the meantime, the Ministry of Tourism and Creative Economy (MoTCE) has done a temporary study of the impact of the increase in entertainment services tax on business and came up with a couple of recommendations that would benefit not only the affected entertainment industry but the whole tourism sector.

Sandiaga Uno, minister of tourism and creative economy, commented: “We agree with the coordinating minister for economy’s proposal (and recommend) for a 10 per cent (company) income tax reduction for the tourism sector.”

MoTCE has also recommended to the regional governments to provide incentives on investments and events to maintain the interests of investors and event organisers to prevent workforce retrenchment. Sandiaga added that the higher the tax is, the lower the interest from “investors and event planners to do business here”.

According to Sandiaga, Bali provincial and districts have issued a fiscal incentive policy, including the regional government in Labuan Bajo – he hopes other provinces will follow suit.

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