Batam has recently increased its tax rates for select entertainment services, now setting a 40% tax on specific entertainment venues. This change comes as part of the city’s effort to align with national financial regulations and potentially impact the entertainment industry’s dynamics.
Batam Government has amended its tax laws, raising the tax rate on certain entertainment services from 35% to 40%. This change was formalized in the Batam City Regional Regulation No. 1 of 2024 concerning Regional Taxes and Retributions, effective January 5, 2024.
The tax increase is specifically applied to certain types of entertainment, including nightclubs, karaoke bars, clubs, bars, and steam bath or spa services.
The Secretary of Batam City’s Regional Revenue Agency, M Aidil Sahalo, highlighted that the hike aims to maintain a sustainable investment climate, especially in the entertainment tourism sector, while adhering to national legislation.
The tax hike is in line with the national law, specifically the Law No. 1 of 2022 on Financial Relations between the Central Government and Regional Governments, setting a minimum tax rate of 40% for these services.
Despite the increase, the entertainment sector in Batam has reportedly not fully recovered from the impacts of the COVID-19 pandemic, with some businesses still struggling to reach pre-pandemic performance levels.
Read More: Batam Imposes 40% Entertainment Tax, Sparks Industry Debate
The overall Tax on Goods and Services in Batam saw a substantial achievement in 2023, hitting 89.01% of its target. However, the entertainment sector only realized 63.72% of its target.
This tax adjustment in Batam may lead to changes in the cost of entertainment services. While it reflects the city’s compliance with national fiscal policies, it also highlights the ongoing challenges in the entertainment sector’s recovery post-COVID-19.
Batam’s government has increased the tax rate on selected entertainment services to 40%, aligning with national financial policies. This change might affect the pricing structure for these services, posing challenges for businesses still recovering from the pandemic’s impacts.
Source: Go Kepri (2024)
