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Time to Face the Music

Badung Officials Move to Increase Tax Revenues from Restaurants Providing Live Music in Bali

(2/17/2012) The financial managers of the Badung regency - where most of the hotels, restaurants and entertainment venues are concentrated in Bali, are seeking to increase tax revenues earned from nightspots.

According to Radar Bali, the Badung Tourism Office and Badung Financial Administration are creating new regulations for nightspots that will include higher tax liabilities for that line of business.

Cok Raka Darmawan, the chief of the Badung Tourism Office (KaDisparda), said the new rules would be issued shortly via regulation issued by the regent. Those regulations will clarify what is meant by a “nightclub” and a “disco” thereby compelling many Bali businesses now operating as restaurants and bars to be reclassified as nightclubs and discotheques.

When in place, the new regulations will precipitate a review by both tourism and tax officials, requiring establishments offering live music to be reclassified into a higher tax bracket imposing 12.5% tax charges on all sales.

“These field check will be conducted during evening business hours and review facilities. If there is musical equipment for bands, then these places are nightclubs,” explained Darmawan.

Darmawan estimates the introduction on the new regulations and enforcement surveys will take approximately one month to complete. He hopes these steps will stop the loss of revenues now being suffered by the regency by nightclubs and discos presenting themselves as restaurants.

Plans are that during the coming review restaurants with their operating permits in order but found to be hosting live music will be offered the option of being reclassified as a disco or nightclub. Alternatively, the restaurants can opt to remove all music equipment and operate only as a restaurant.

Restaurants are subject a 10% tax on sales while discos and nightclubs must pay a sales tax of 12.5%. Initially, the areas targeted for inspection are in Kuta, Legian and Seminyak, with other areas of the Badung regency to follow in the near future.

According to current data provided by Darmawan, there are 284 restaurants and 351 bars registered in the Badung regency. The Badung tourism official expects the number of restaurants registered in Bali to decline as some restaurants become reclassified as nightclubs and discos.