Jakarta, CNBC Indonesia – General Chairman of the Indonesian Tourism Industry Association (GIPI) Hariyadi Sukamdani gave evidence that entertainment service companies such as discos, karaoke, nightclubs, bars and steam baths/spas died due to the minimum tax rate of 40% -75%.
The tax rate provisions are stipulated in Article 58 paragraph 2 of the Financial Relations Law between the Central Government and Regional Governments (HKPD Law). GIPI has also submitted a judicial review or material test to the Constitutional Court regarding this article on Wednesday (7/2/2024).
“The losses are no longer calculated in rupiah but closed. This is definitely over, stop them, what we are worried about will be illegal practices, bribing government officials, officials, so that they can survive,” said Hariyadi at the Constitutional Court Building, Jakarta, Wednesday (7 /2/2024).
Hariyadi also provided evidence that the tax provisions in Article 58 paragraph 2 of the HKPD Law killed entertainment services such as discos, karaoke, nightclubs, bars and steam baths/spas. He based it on data from 177 regions out of a total of 436 regions that have set rates, according to records from the Ministry of Finance.
The rates were previously determined by 177 regions using the Regional Tax and Regional Retribution Law (PDRD). In Article 45 paragraph 2 of the PDRD Law, fashion shows, beauty contests, discos, karaoke, nightclubs, stunt games, massage parlors and steam baths/spas are set to have a maximum tax of 75% even though there is no minimum limit of 40% like the HKPD Law.
Regions that have implemented a tariff of 40% -75% include Siak Regency, East Tanjung Jabung Regency, Ogan Komering Ulu Regency, East Belitung Regency, Lebak Regency, Grobokan Regency and Tual City.
According to Hariyadi, of the 36 associations under GIPI, there is not a single special entertainment service such as discotheques, karaoke, nightclubs, bars and steam baths/spas that operates in areas that apply a tax rate of 40% -75%. So, when it is determined generally with a minimum limit of 40% in the HKPD Law, it is certain that there will be no more types of entertainment services in each region.
“I'll take the example of East Belitung, where there are 75% discotheques, but they don't have any goods, so if that's the case, no business would want to pay that much,” stressed Hariyadi.
Therefore, Hariyadi emphasized, if entertainment services collapse with the application of a tax rate of 40% -75%, the end result will be the workers in it who will lose their jobs, even though entertainment services never require special qualifications in absorbing labor.
“What's wrong with entertainment services? If it's wrong, just revoke the permit, Alexis has already done that, but don't play tax instruments because this sector has a high workforce, it doesn't require high qualifications, it really absorbs a lot of people,” stressed Hariyadi.
Therefore, he hopes that the Constitutional Court will grant the lawsuit against Article 58 paragraph 2 submitted by GIPI. According to him, the appropriate tax rate for special entertainment services is a maximum of 10%, as has been the application of special entertainment tax rates in various regions using the PDRD Law.
He also said that GIPI will make a circular so that special entertainment that is affected by the tax rate of Article 58 paragraph 2 of the HKPD Law pays taxes according to the old regulations in the regions so far, so that they do not die when they are charged the tax rate starting January 2024.
“Because there is no decision yet, we are making a circular, we are asking all our members to pay the old rate first, but if the Constitutional Court decides, we hope that the new rate will be granted, a maximum of 10% because that is what is acceptable,” said Hariyadi.
[Gambas:Video CNBC]
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