Entertainment Tax Increases Up to a Maximum of 75%, Airlangga Ensures It’s Not Absolute

Entertainment Tax Increases Up to a Maximum of 75%, Airlangga Ensures It's Not Absolute
Entertainment Tax Increases Up to a Maximum of 75%, Airlangga Ensures It's Not Absolute

The government has recently implemented a notable change in the specific goods and services tax (PBJT), specifically targeting entertainment services (entertainment tax), with a hike ranging from 40% to a maximum of 75%. In response to the widespread public apprehension, Coordinating Minister for Economic Affairs, Airlangga Hartarto, assured that discussions with Finance Minister Sri Mulyani have been initiated to address the concerns surrounding this tax adjustment.

Airlangga shared these insights during a visit to Labuan Bajo, East Nusa Tenggara, where he was distributing food aid at the Perum Bulog office. He highlighted that even in renowned tourist destinations like Mandalika, Bali, and Labuan Bajo, similar concerns have been raised by businesses.

“I have engaged in discussions with the Finance Minister; this was also a topic during my recent visit to Bali. In tourist-centric regions such as Labuan Bajo, Mandalika, and Bali, the common grievance pertains to the 40% tax rate,” articulated Airlangga on Monday (15/1/2024).

While emphasizing the existing regulations governing tax increases for entertainment services like karaoke, discotheques, nightclubs, bars, and spas, Airlangga refrained from confirming any imminent revisions. Instead, he underscored that the Financial Relations between the Central and Regional Governments Law (UU HKPD) already contains provisions to address such matters.

“Within UU HKPD, there exists Article 11, which provides a mechanism for exemptions. Regional governments, be it regents or governors, can propose exemptions. So, flexibility is inherent in the system,” elucidated Airlangga.

According to Airlangga, the tax increase of 40-75% for entertainment service providers could potentially be subject to exemptions. He pointed out that regional governments are well-versed in understanding the nuances of exceptions within the goods and services tax framework.

“While a revision may be considered in the future, the current law offers a viable solution, necessitating a comprehensive socialization process. The application of the 40 percent rate is contingent on local wisdom and the intricate financial dynamics between the central and regional governments,” clarified Airlangga.

He added, “Regions with a clear understanding can make informed decisions, including exemptions, guided by the provisions in the mentioned article.”

The recent surge in discussions surrounding the PBJT increase, with rates fluctuating between a minimum of 40% and a maximum of 75%, has drawn significant attention from the public. Notable figures, including the renowned lawyer Hotman Paris Hutapea, have contributed to the ongoing discourse on this fiscal adjustment.