Jakarta. Renowned lawyer Hotman Paris has expressed his disapproval of the significant hike in entertainment tax, which ranges from 40 percent to 75 percent. He urged President Joko "Jokowi" Widodo to postpone the enforcement of these tax rates.

"This is the highest tax in the world, and there is no reason to raise the tax. In addition to entertainment businesses having to pay 40 percent to 75 percent in entertainment tax, they also have to pay a 22 percent corporate income tax. Which entrepreneur wouldn't go bankrupt, sir?" Hotman Paris said in a post on his personal Instagram account @hotmanparisofficial, on Wednesday.

Hotman Paris holds a significant stake in the HW Group. This entertainment conglomerate manages The H Club, one of the largest nightclubs in Jakarta and Asia, as well as Atlas Beach Club in Bali, one of the biggest beach clubs in the world. The HW Group's diverse portfolio also features establishments like Helen's, Gold Dragon, Golden Tiger, and the newly inaugurated Phoenix Club, which commenced operations on Dec. 13, 2023.

"Many middle to lower-income citizens will suffer if the tourism sector does not progress. Thailand has even lowered the entertainment tax to just 5 percent, and the alcohol tax has been reduced. Tourists are heading to Dubai, Thailand, and Malaysia; Bali seems a bit quiet," Hotman Paris said.

Tourism and Creative Economy Minister, Sandiaga Salahuddin Uno, has reassured that the recent increase in the entertainment tax rates for service providers will not adversely affect the tourism sector.

Sandiaga stressed that the government's objective with this policy is to empower and boost prosperity, rather than impede business development. "There's no need to worry, we will continue to offer support," said Sandiaga Uno, as reported by Antara on Thursday.

Under the law governing Financial Relations between the Central Government and Regional Governments (HKPD), the goods and services tax for entertainment venues like nightclubs, karaoke lounges, bars, and spas are now set at a minimum rate of 40 percent, and a maximum of 75 percent. Previously, the law had stipulated an entertainment tax ranging from a minimum of 10 percent to a maximum of 35 percent.

The adjustment in tax rates for entertainment services took effect on Dec. 8, 2023, as the tourism sector is gradually recovering from the Covid-19 pandemic.

Conversely, Thailand has taken steps to stimulate tourism by approving a tax cut on alcoholic beverages and entertainment venues. The new measures include reducing taxes on wine from 10% to 5% and eliminating taxes on spirits, which were previously at 10%. Additionally, the excise tax on entertainment venues will be halved, dropping from 10 percent to 5 percent.