Jakarta. Tourism and Creative Economy Minister Sandiaga Uno advises regional governments to delay the implementation of the controversial entertainment tax rates until the Constitutional Court (MK) releases the outcome of the judicial review submitted by industry stakeholders.

During the period of awaiting the judicial review decision, Sandi hopes that local authorities can engage in discussions about supplementary incentives, both fiscal and non-fiscal, to bolster the impacted industry and sustain business continuity for entrepreneurs.

"I urge regional governments not to rush into implementing new policies regarding tax rates. The reason is that this law is currently undergoing judicial review in the Constitutional Court," said Sandi.

The government has officially set the entertainment tax rates, including for nightclubs, karaoke houses, nightclubs, spas, and bars, between 40 percent and 75 percent for this year. This provision came into effect in early January 2024.

This policy has faced criticism from various parties, including entertainment venue entrepreneurs like Inul Daratista and Hotman Paris Hutapea. They complain about the threat of bankruptcy due to what they consider excessively high tax rates.

The Indonesian Hotel and Restaurant Association (PHRI) is preparing to submit a judicial review regarding the law. Yuno Abeta Lahay, vice chairman of PHRI, said that this legal step is being taken due to the close connection between entertainment venues and hotels and restaurants.

"The submission of the judicial review to the Constitutional Court is currently underway and will be filed soon. Despite some regions issuing local regulations, we feel the need to take this step, and there was a discussion with the Tourism and Creative Economy Ministry yesterday. However, we believe it should also involve the Finance Ministry and the Home Affairs Ministry," said Yuno in Bandung, West Java, on Wednesday, as quoted from news agency Antara.

Yuno said that the content of the judicial review differs from the lawsuit filed by the Indonesian Spa Therapists Association (ASTI). PHRI is seeking the elimination of the provision stipulating the tax rate ranging from 40 percent to 75 percent.

"We ask for the tax rate to be returned to the previous level, which is 10 percent, " he added.

Yuno said that the tax rate ranging from 40 percent to 75 percent has raised concerns among business owners, particularly in West Java, where the entertainment industry plays a crucial role in supporting tourism.

"The entertainment industry is a collaboration. Entertainment and its affiliated sectors contribute to tourism, and these concerns are beginning to have an impact. Mrs. Inul Daratista has already noted a decline in visits. We, as stakeholders in the tourism sector, believe that hindrances in entertainment and lifestyle automatically have repercussions on the entire tourism business" said Yuno.

He added that currently, only Bogor in West Java has established an entertainment tax rate of 50 percent.

Previously. Chief Investment Minister Luhut Binsar Pandjaitan has called for the suspension of the controversial tax hike on nightclubs, karaoke houses, and bars due to mounting protests from industry stakeholders.

“In my opinion, we need to postpone the implementation [of the tax hike] to allow us time to evaluate its impacts on the people and especially small-scale businesses,” Luhut wrote in an Instagram post on Wednesday. 

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