The rapid business activities and economic activities, especially in metropolitan areas, make people increase their tendency to seek entertainment. The need for entertainment is classified as tertiary so that it can only be reached by certain groups or classes of society.
Since mid-January, news related to the increase in entertainment tax rates has been widely reported by many national media. The entertainment tax itself is regulated in Law No. 1 Year 2022 on Financial Relations between the Central and Regional Governments (HKPD Law). The HKPD Law has been effective since January 1, 2022. The question is, why has the outcry over the entertainment tax only intensified recently?
The HKPD Law reforms the financial relationship between the central and regional governments, including regional revenue sources from taxes and levies. According to HKPD Law Article 1 point 49, Arts and Entertainment Services are services for providing or organizing all types of spectacles, performances, games, dexterity, recreation, and/or crowds for enjoyment.
Furthermore, Article 50 letter e of the HKPD Law stipulates that Arts and Entertainment Services include Specific Goods and Services Tax (PBJT). Entertainment tax is paid by the final consumer of an entertainment consumption and the collection is carried out by the regency/city government.
In Article 58 paragraphs (1) and (2) of the HKPD Law, the PBJT rate is set at a maximum of 10%. Meanwhile, specifically for entertainment services in discotheques, karaoke, nightclubs, bars, and steam baths/spas, the tax rate is set at a maximum of 10%.
