Indonesian Govt Issues Incentive to Mitigate Entertainment Tax Hike

Tax system

After implementing entertainment taxes ranging from 40 to 75 percent, the Indonesian government is now offering incentives to mitigate resistance from business players. The Coordinating Economic Affairs Minister Airlangga Hartarto stated that fiscal incentives are being provided to facilitate investment. "Post-pandemic, the tourism sector is starting to grow, and local taxes for tourism are continually increasing. We need to promote the development of the tourism sector, which significantly contributes to the gross domestic product and job creation," he said on Jan 20.

According to Airlangga, fiscal incentives, such as reductions, reliefs, and exemptions or abolishment of levies, are regulated in Law No. 1/2022 concerning the Financial Relations between the Central Government and Regional Governments (UU HKPD). Later on, fiscal incentives will be granted by regional heads with consideration to protect micro and ultra-micro businesses and support the achievement of regional priority programs or national priority programs. "Fiscal incentives are implemented according to the characteristics of each region so that some areas can still maintain existing tax rates."

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