Thailand recently announced that it will be cutting taxes for alcohol and entertainment venues to further boost tourism in the country, most notably introducing a controversial 0% tax on liquors.
With that in mind, it looks like Indonesia is taking the exact opposite approach as the country has just hiked its entertainment tax to a rate of up to a whopping 75%!
As reported by the Indonesian portal TV Berita, a new law governing Financial Relations between the Indonesian Central Government and Regional Governments is prescribing that goods and services tax (GST) for entertainment venues like nightclubs, bars, karaoke lounges and spas are now set at a minimum rate of 40% and a maximum of 75%.
This was announced by Indonesia’s Tourism and Creative Economy Minister Sandiaga Salahuddin Uno, with the tax adjustment taken effective retrospectively on 8 December 2023. Previously, the entertainment tax in the country ranged only from 10% to 35%.
Indonesia’s tourism and creative economy minister, sandiaga salahuddin uno
Of course, such a drastic increase has caused controversies in the country, with many industry layers protesting and demanding a review of the tax increase and expressing concerns that it might result in widespread job losses.
As reported by Jakarta Globe, Hariyadi Suakmdani, the Chairman of the Indonesian Hotel and Restaurant Association (PHRI) went as far as calling for a judicial review of a law imposing substantial increases.
In a separate report by Jakarta Globe, Sandiaga has allayed concerns about the up to 75% tax rate, assuring that the increase will not adversely affect the country’s tourism sector. The Tourism and Creative Economy Minister further claimed that the Indonesian Government’s objective with the policy was to empower and boost prosperity rather than impede business development.
Hence, if you’re planning on a trip to Indonesia sometime soon, don’t be shocked if these exorbitant tax hikes are passed down to you when you visit these entertainment places.
So, what do you guys think of the whole situation? Share your thoughts with us in the comments!
