DIGIVESTASI - Raising the entertainment tax to 40-75% is a hotly debated topic. This has become a concern for many parties as business players are worried about the lack of entertainment in Indonesia. 
Entertainment tax is regulated in Law No. 1/2022 on Financial Relations between the Central Government and Regional Governments. 

Referring to article 55 of n°1/2022, the tax objects of arts and entertainment services are:

1. Movie shows or other forms of audio-visual shows that are shown live in a certain location
2. Performances of art, music, dance, and/or fashion
3. Beauty contests
4. Bodybuilding contest
5. Exhibition
6. Circus, acrobatics and magic shows
7. Horse racing and motor vehicle races
8. Agility games
9. Sports games by using places/spaces and/or equipment and equipment for sports and fitness
10. Recreational water rides, ecological rides, educational rides, cultural rides, snow rides, game rides, fishing, agro-tourism, and zoos
11. Massage and reflexology parlors
12. Discotheques, karaoke, nightclubs, bars, and steam baths/spas

Certain goods and services tax (GST) rates for entertainment services in discotheques, karaoke bars, nightclubs, bars and saunas/spas are only 40% and can go up to 75%.

Chairman of the Indonesian Hotel and Restaurant Association (PHRI) Badung, Bali, I Gusti Agung Ngurah Rai Suryawijaya said that the PBJT increase was opposed by economic stakeholders. This is related to the process of resuming tourism activities after the pandemic, so the estimated 40% increase in entertainment tax on December 28, 2023 is unexpected and severe.

Based on the filing, the rule came into effect on January 1, 2024. Almost all taxpayers are subject to the new rules. Reporting and payment will begin on February 1, 2024. However, tax reporting and payment for December 2023 continues to use the old tax rate effective January 1, 2023. 

In response, Suryawijaya said PHRI including spa contractors have never been involved in the implementation of the entertainment tax from the beginning of at least 40%. According to PHRI Bali, Chairperson of the Jakarta Entertainment Entrepreneurs Association (Asphija) Hana Suryani considered the new entertainment tax rules irrelevant for entrepreneurs.

Hotman Paris challenged the 40% entertainment tax through his personal Instagram account @hotmanparisofficial. He uploaded a screenshot of the HKPD law on nightclub and spa taxes. Hotman thinks the 40% tax rate is too high and could kill the business world. He also asked other entertainment companies to oppose the regulation. "Really!? 40% tax? Starting January 2024?? Super high? Will it kill the business? Come on entrepreneurs shout, wrote Hotman in his video upload, Saturday (June 1).

Entertainment Tax in Indonesia is High, What about Other Countries? 

Among neighboring countries, Indonesia's entertainment tax that increases to at least 40% ranks first, compared to Singapore's 15%, Malaysia's 10%, the United States (Chicago)'s 9%, and Thailand's 5%. 5%.

Foreign public artists in Singapore are subject to a 15% withholding tax on taxable income from services performed in Singapore. The withholding tax rate will be reduced from 15% to 10% if income from services rendered in Singapore is due and payable to the foreign public artist between February 22, 2010 and March 31, 2022.

The preferential tax rate of 10% will expire after March 31, 2022. From April 1, 2022, a 15% withholding tax rate will apply to taxable income from services provided in Singapore. Unlike Indonesia, Malaysia instead wants to lower taxes for the entertainment sector. Malaysian Prime Minister Datuk Seri Anwar Ibrahim announced that the entertainment tax will be reduced from 25% to 10% for international artists, with full exemptions for local artists. 

In the United States, including Chicago, the entertainment tax on movie theaters, concerts, and sporting events is 9%, including those who only enjoy entertainment at home. In addition, listening to your favorite holiday music at home such as Spotify, Apple Music, or Pandora will incur the same entertainment tax of 9% each month. According to the National Taxpayers Association, Chicago is the first city in America to impose such a large tax on streaming services. 

The city's entertainment tax generated $232 million in revenue in 2022, up from $146 million in 2015, when streaming services were first included.  Meanwhile in Thailand, according to The Economic Times, the government reduced taxes on alcoholic beverages and entertainment venues to boost domestic tourism.

The approved measures include the reduction of the tax on wine from 10% to 5% and the elimination of the tax on alcoholic beverages, which was previously at 10%. Furthermore, the excise tax on entertainment venues will be halved, from 10% to 5%. The tax adjustments presented by government spokesperson Chai Wacharonke will be in effect until the end of this year. 

Facing the current situation, the sudden increase in entertainment tax in Indonesia without socialization and participation of entrepreneurs has made entertainment entrepreneurs speak up. If this situation continues without proper socialization and improvement, then the domestic entertainment industry is at risk of recession, especially in the context of unstable global conditions and domestic consumption levels that have not improved.