18-1-2024 (JAKARTA) Tourism operators in Bali are voicing strong opposition to the Indonesian government’s recent policy of increasing taxes on entertainment venues, including nightclubs, bars, and spas. The new policy, effective this month, raises the tax from 15 percent to a range of 40 to 75 percent, causing concern among Bali tourism stakeholders who fear a negative impact on the island’s tourism.
IGN Rai Suryawijaya, Chairman of the Badung Branch of the Indonesia Hotel and Restaurant Association, expressed deep concern about the potential consequences of the tax hike, stating that it could be detrimental to businesses. Stakeholders, including nightclub owners, gathered in Canggu, Badung, to discuss the matter.
The Indonesian Tourism Industry Board (GIPI) is planning to petition the Constitutional Court for a judicial review of the tax increase, referring to Article 58, Paragraph 2 of Law No. 1/2022. This article stipulates a tax rate between 40 and 75 percent for specific goods and services tax (PBJT) on entertainment services starting this year.
“We agreed to delay the payment of the tax based on the new law. We will wait for the judicial review process,” stated Rai, emphasizing that a 15 percent tax rate would be more reasonable.
Hotman Paris, a nightclub owner and lawyer, expressed concern that the high tax tariff could lead to the closure of many businesses in Bali, as the island might lose tourists to other destinations with more favorable tax conditions, such as Thailand and Dubai.
“Thailand only imposes a 5 percent tax. Meanwhile, in Dubai, the top tourism destination, the alcoholic beverage tax is zero,” claimed Hotman.
Save Bali Spas, a group of Bali spa business owners, has drafted a petition to reject the new policy, arguing that spas should not be categorized as entertainment. They emphasize that spas are health and wellness facilities, not on the same level as nightclubs and bars.
Indonesia’s entertainment tax is notably higher than that of its neighbors, with Malaysia applying a 25 percent entertainment tax and Thailand reducing its tax from 10 to 5 percent earlier this year to attract more tourists.
Tourism and Creative Economy Minister Sandiaga Uno urged stakeholders to wait for the judicial review and avoid escalating the issue to maintain a positive narrative about Indonesian tourism, which has been recovering.
This development has sparked concerns among Bali’s tourism industry, which fears a potential decline in foreign tourist visits due to the increased tax burden on entertainment venues. Bali’s tourism stakeholders emphasize the need for a reasonable tax rate to sustain the island’s attractiveness and competitiveness in the global tourism market.
