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Top Entertainment Tax Rate now 75%

Newly Approved Tax Rates May Throttle Indonesia's Entertaiment Industry.

(7/29/2006) The always authoritative e-newsletter Indonesia Digest, edited by Ibu Wuryastuti Sunario, reports that the Indonesian government has raised the maximum allowable tax on 7 types of amusement and entertainment, up from the former 35% to a maximum 75%. This measure is to allow Regions to receive additional incomes, or to limit excessive growth in the entertainment industry in their areas, said Director General on Administration of Regions in the Department of Home Affairs, Daeng M. Nazier on Thursday, 4 May, as reported in the Kompas daily. The seven that may be slapped these high tax rates are: games in skills, discos, bars, night clubs, karaoke, steam baths, massage parlors, fashion shows, and beauty contests.

Whereas, on other forms of entertainment outside the above, as well as traditional cultural performances still apply the old tax rate of 35%.

General Manager of Hard Rock Caféin Jakarta, Yoris Sebastian, expressed dismay at the sudden jump in these tax rates. This will cause promoters to think twice before staging performances in Indonesia. Indonesian musicians and artists will also face problems and will limit holding concerts in the regions, Yoris said.

Bali officials have yet to announce whether they will respond to the new tax option by creating a low tax regime to encourage entertainment events in Bali or take full advantage of the ability to impose the high tax level allowed under the new measures.

 

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