Batam’s local government, through the Regional Revenue Agency (Bapenda), is preparing to offer fiscal incentives regarding the Tax on Certain Goods and Services (PBJT) rates for entertainment services such as nightclubs, karaoke bars, nightclubs, bars, and spas.
This initiative aims to ease the tax burden on businesses in the entertainment sector. Local authorities have consulted with the Indonesian Ministry of Finance and the Ministry of Home Affairs to explore possible fiscal incentives aligned with the law.
The Secretary of Bapenda Kota Batam, M. Aidil Sahalo, revealed that discussions have been held with relevant ministries in Jakarta to determine the steps the local government can take in offering fiscal incentives to taxpayers in the entertainment sector. This aligns with the provisions outlined in Law No. 1 of 2022 on the Financial Relations between the Central Government and Local Governments (HKPD).
Photo: Go Kepri (2024)
The specifics of these fiscal incentives, including the scope and duration, will depend on the outcomes of discussions between local authorities and relevant ministries. Tariff adjustments are being considered, with the intention of offering relief to taxpayers in the entertainment industry.
Under Law No. 1 of 2022, the central government has set PBJT rates ranging from a minimum of 40% to a maximum of 75%. Batam, however, applies a minimum tariff of 40% for entertainment taxes. While the regulations have been established, tax payments will commence in February 2024 to accommodate the region’s taxpayers’ capabilities.
Aidil also mentioned that the local government is awaiting the results of a judicial review submitted by the Indonesian Entertainment Business Association (Aspehindo) and other entertainment industry associations to the Constitutional Court (MK).
Read More: Batam Raises Entertainment Tax to 40% for Selected Sectors
The Minister of Economic Affairs, Airlangga Hartarto, highlights that fiscal incentives will be determined through local regulations, offering flexibility to set lower tax rates based on regional characteristics and cultural considerations, potentially boosting economic growth and tourism in various regions.
Batam’s initiative to offer fiscal incentives to the entertainment sector aims to provide relief to local businesses while adhering to national tax regulations. The outcome of discussions with the central government will determine the extent and nature of these incentives.
Batam’s local government is exploring fiscal incentives for entertainment sector taxpayers, aiming to alleviate tax burdens in line with national tax laws. The specifics of these incentives will depend on consultations with relevant ministries.
