entertainment

The Entertainment Tax Ranging From 40% To 75% Remains In Effect, Necessitating Special Attention For Family Karaoke Businesses

The Tax Rate for Certain Goods and Services (PBJT) remains set at 40% to 75% for entertainment services in discotheques, karaoke venues, nightclubs, and bars for this year. 

Nailul Huda, the Director of the Center of Economic and Law Studies (Celios), believes that the certainty of this increase in entertainment tax could adversely affect the business landscape, particularly for family karaoke establishments. 

"Family karaoke appears to be the most impacted, as the middle-class consumers and workers are significantly affected," Nailul stated in an interview with Kontan.co.id on Sunday (January 5). 

He emphasized that the primary market for family karaoke consists of the middle class, which is highly sensitive to price changes. This contrasts with the clientele of discotheques, nightclubs, and bars, which predominantly includes upper-middle-class consumers. 

"Demand will decline when prices increase. Therefore, there should be a redefinition of the entertainment business, especially concerning family karaoke," he explained. 

Regarding the impact of tax increases on other entertainment businesses such as discotheques or nightclubs and bars, he noted that a minimal increase of 40% would not significantly affect the market. However, if the maximum rate of 75% is implemented, he assured that the entertainment sector would be severely impacted. 

It is important to note that the enforcement of the entertainment tax rate of 40-75% is based on a ruling by the Constitutional Court (MK), which rejected a request for a material review of the PBJT tax rate for entertainment services in discotheques, karaoke venues, nightclubs, bars, and spas. 

The MK clarified that the applicant questioned the imposition of the lowest rate of 40% to 75% specifically for PBJT on artistic and entertainment services in discotheques, karaoke venues, nightclubs, bars, and spas. 

"The applicant sought to have the PBJT rate treated uniformly, including concerns about the potential for double taxation on PBJT," as stated in the MK ruling No. 32/32/PUU-XXII/2024, referenced on the official MK website on Friday (January 3). 

Tag: Nailul Huda PBJT