Tourism Industry Entrepreneurs File Judicial Review of the HKPD Law to the Constitutional Court

JAKARTA. The Indonesian Tourism Industry Association (GIPI) has filed a judicial review request to the Constitutional Court on Article 58 paragraph (2) of Law Number 1 of 2022 concerning the Financial Relations between the Central Government and Regional Governments (HKPD).

Quoting cnbcIndonesia.com, the business actors under GIPI are requesting the repeal of Article 58 paragraph (2) of the HKPD Law, considering it discriminatory. This provision sets a Specific Goods and Services Tax (PBJT) rate for entertainment at a minimum of 40% to 75%.

Meanwhile, other entertainment tax rates, outside PBJT, are set at a maximum of 10%. Therefore, GIPI considers that the PBJT rate should follow other entertainment tax rates, which is a maximum of 10%.

In addition, GIPI's Chairman Hariyadi Sukamdani assessed that it was not in accordance with the principles that should be carried out in making laws. "This is certainly an inappropriate decision because it results in discrimination against business actors who have run their businesses under applicable regulations and laws," said Hariyadi.

Previously, the Directorate of Regional Taxes and Regional Levies of the Directorate General of Fiscal Balance of the Ministry of Finance recorded that regions that have implemented the special entertainment tax of 40%-75% include Siak Regency, East Tanjung Jabung Regency, Ogan Komering Ulu Regency, East Belitung Regency, Lebak Regency, Grobogan Regency, and Tual City.

In detail, the tax rate range of 40-50% is in 36 regions, 50-60% in 67 regions, 60-70% in 16 regions, and 70-75% in a total of 58 regions. Thus, a total of 177 regions have implemented this special entertainment tax rate within the range of 40-75% under the Regional Tax and Retribution Law (PDRD Law), out of a total of 436 regions.

According to Hariyadi, of the 36 associations under GIPI, there is not a single special entertainment service such as discotheques, karaoke, nightclubs, bars, and steam baths/spas that operates in areas that apply the 40%-75% tax rate. Therefore, when it is set generally with a minimum limit of 40% in the HKPD Law, it is certain that there will be no more types of entertainment services in each region, resulting in the loss of employment opportunities. (ASP)