Heaptalk, Jakarta — On January 5, 2024, Indonesia’s government, through the Directorate General for Regional Retribution (DJPK), the Ministry of Finance, released Law No. 1 Year 2022, known as Law Regulated Finance Connection between Central Government and Regional Government (UU HKPD) which stated that the Government to imposed tax for entertainment industry in a particular category of 40% – 75%.
The new policy further sparked protests from entrepreneurs. The business actors considered that the fresh regulation had never been stated in the previous law. Moreover, the hike of tax duty is perceived to hit back the industry significantly, notably for regions who still strive to revive during the post-COVID.
The tax duty escalation further received a special concern from the Regional Legislative Council (DPRD) for Jakarta. The Chairman of Jakarta’s Parliament, Prasetyo Edi Marsudi, stated that this policy could possibly lead to massive layoffs aligned with the increase in customer numbers in this industry.
However, the Director of DPJK, Lydia Kurniawati Christyana, stated to remain firm in its stance. Even she conveyed that she is poised to encounter a constitutional court trial.
“I am ready and will not be absent in the first hearing for this issue,” affirmed Lydia.
Lydia also conveyed that 1 out of 12 points of tax for certain goods and services stated that the tax duty for certain entertainment services, including bars, nightclubs, karaoke, and spas, would be increased.
“We cannot say that this policy does not support the tourism industry. In this new regulation, there are exceptions, especially for businesses with cultural promotion purposes,” said Lydia.
Responding to this issue, Tourism and Creative Economy Minister Sandiaga Salahuddin Uno, during Weekly Brief with Sandi Uno in Jakarta (01/22), voiced that the new regulation contains great points, namely to embody fiscal decentralization and provide flexibility to each region to adapt to the condition in the field.
In an official press release, Coordinating Minister of Economic Affairs Airlangga Hartanto stated that the central government will stick to the new regulation. He added, “However, the businesses do not need to be worried because the Government will hold internal meetings to channel incentives.”
In more detail, the central government will deliver Fiscal Incentives to Income Tax (PPh) for businesses, particularly those in the tourism sector, in the form of tax reduction or facility covered by the government, namely 10% of income tax. Therefore, the income tax for businesses will be reduced from 22% to 12%. Airlangga voiced that this fiscal incentive would be the solution for businesses in the industry.
