BAHLIL: THE ENTERTAINMENT TAX WOULD DISRUPT THE INVESTMENT CLIMATE

MINISTER of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia assesses that the increase in entertainment tax will impact and disrupt the investment climate.

The increase in entertainment tax is contained in Law Number 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments (HKDP Law), which states that certain goods and services tax (PBJT) is for entertainment services at discotheques, karaoke, nightclubs, bars, and steam/spa baths are set as low as 40% and as high as 75%.

“It feels like it will (disrupt investment), but the evidence will only be implemented, right? I haven’t seen it yet, but my feeling is that it will have an inappropriate impact,” he said in a presentation on 2023 investment realization in Jakarta, Wednesday (01/24), 2024.

Bahlil admitted that implementing the entertainment tax would certainly disrupt investment interest. He also said he had requested that this provision be postponed so that it could be studied further.

“In my opinion, those who have experienced entertainment tax facilities in the past are expensive too. No one would come in if they were this expensive,” he said.

It is known that the Ministry of Finance (Kemenkeu) said that the increase in Certain Goods and Services Tax (PBJT), especially in the arts and entertainment category, was carried out in the context of controlling certain activities.

However, because it was considered burdensome and business actors complained, the government decided to immediately issue a circular containing fiscal incentives including relief in the application of the special entertainment tax rate of 40-75%.

“We can say that regional (governments) can impose taxes lower than 40 or 70% according to each region,” said Coordinating Minister for the Economy Airlangga Hartarto in Jakarta, Friday (01/19), 2024.

Airlangga explained that the entertainment tax rate could be applied lower because a number of provisions in the articles of the HKPD Law provide room for this reduction. [antaranews]