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Jakarta, CNBC Indonesia – The issue of increasing entertainment taxes has been widely discussed by the public recently, because many business people object to it an increase in the entertainment tax rate which is considered too high.
Previously, the Indonesian government would increase entertainment tax rates to around 40% to 75%. Of course, this is considered too heavy for business actors related to the entertainment industry and will have an impact on reducing turnover and share prices.
Regardless of the pros and cons of increasing entertainment tax, it would be good for us to know entertainment issuers in Indonesia. CNBC Indonesia Research noted that there are 13 issuers operating in the entertainment industry, including their supporters.
Of these 13 shares, of course, the current market capitalization is quite large. On average, these 13 stocks are included in stocks with medium market capitalization (midcap) with a range of IDR 1 trillion to IDR 50 trillion.
So what entertainment stock has the largest market capitalization? The following are entertainment stocks based on their market capitalization and share price movements as of last Thursday.
The shares of Manoj Punjabi's film production house, namely PT MD Pictures Tbk (FILM), are the entertainment shares with the largest market capitalization, reaching IDR 50.89 trillion as of yesterday's trading.
FILM itself is actually a media issuer related to the film production house industry. However, its role is quite important in the entertainment industry in Indonesia.
Meanwhile, from the list of entertainment stocks, there are property issuers. However, the issuer has a portfolio in the development of one of the tourist centers in Jakarta, namely Ancol. The shares are PT Pembangunan Jaya Ancol Tbk (PJAA), where the market capitalization reaches IDR 1.6 trillion.
The entertainment issuers with the smallest market capitalization are the issuers bar club owned by artist Wulan Guritno, namely PT Lima Dua Lima Tiga Tbk (LUCY), where the market capitalization reaches IDR 191.88 billion.
Returning to the discussion regarding entertainment tax, the regional government that has issued a regional regulation imposing a 40% entertainment tax is Badung district, Bali, which will come into effect on January 1 2024. Likewise with DKI Jakarta whose decree will come into effect on January 5 2024.
However, the new regulations received comments from Indonesian Minister of Tourism and Creative Economy Sandiaga Uno assessing the need for the government and business actors to sit down together to find the best solution.
Even though this tax is a type of tax collected by the district/city government, the tax is paid by consumers so that business actors only collect the tax that has been determined. But of course this will have a big impact.
If you have to spend more money on entertainment, it is possible that there will be a decrease in visitors because the costs will be more expensive for consumers. So it has the potential to reduce the income of entertainment business actors. In fact, entertainment tax is one of the pillars of regional tax revenue.
The negative impact will also be felt by several share price performances that have nightclubs, karaoke and alcoholic beverage businesses. Alcoholic drinks are synonymous with being the main menu in nightclubs.
Even so, in fact not all entertainment industries in Indonesia will experience an increase in entertainment taxes. The Ministry of Finance stated that not all entertainment venues will be subject to the 40-75% tax rule. Some entertainment venues such as cinemas and circuses have actually had their tax reduced to 10%.
“This is proof of support for the government's commitment that the government is very committed to developing regional tourism,” said Director of Regional Taxes and Regional Levies DJPK Ministry of Finance Lydia Kurniawati Christyana quoted Thursday, (18/1/2024).
The tariff reduction is regulated in Law Number 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments (HKPD). The law explains that arts and entertainment services are included in the category of certain goods and services tax rates (PBJT).
Article 55 of the HKPD Law explains that there are 12 types of arts and entertainment services including, a. watching films or other forms of audio-visual spectacles shown live at a certain location; b. art, music, dance and/or fashion performances; c. beauty contest; d. bodybuilding contests; e. exhibition; f. circus, acrobatics and magic shows.
Apart from that there are also: g. horse racing and motor vehicle competitions; h. dexterity games; i. sports games using places/spaces and/or equipment and supplies for sports and fitness; j. recreational water rides, ecological rides, educational rides, cultural rides, snow rides, game rides, fishing, agrotourism and zoos; k. massage and reflexology parlours; and l. discotheque, karaoke, nightclub, bar and steam bath/spa.
Furthermore, Article 58 of the Law paragraph (1) of the HKPD Law explains that the PBJT tariff is set at a maximum of 10%. In Article 58 Paragraph (2) it is explained that the tax rate of 40% to 75% only applies to discotheques, karaoke, nightclubs, bars and steam baths/spas.
“Specifically, PBJT rates for entertainment services at discos, karaoke, nightclubs, bars and steam baths/spas are set at a minimum of 4O% and a maximum of 75%,” reads Article 58 Paragraph (2) of the HKPD Law.
The number of entertainment business sectors that can be subject to tariffs of up to 75% is reduced compared to the old provisions, which were regulated in the Regional Taxes and Regional Retributions Law (UU PDRD). Article 45 of the PDRD Law specifically states that for entertainment in the form of fashion shows, beauty contests, discos, karaoke, nightclubs, skill games, massage parlors and steam baths/spas, the tax rate can be set at a maximum of 75%.
In the PDRD Law, the entertainment tax rate outside the special sector is set at a maximum of 35%, higher than the rate in the HKPD Law which is 10% specifically for entertainment services outside of discotheques, karaoke, nightclubs, bars and steam baths/spas. .
Lydia said tax rates for a number of entertainment sectors were lowered to support tourism. He explained that in the old law the tax rate for entertainment could be up to 35%, but now it has been changed and reduced to 10%.
“This is very pro-tourism and promotion of national culture, which was already in the law up to 35%, but now it has been changed and reduced to 10%,” he said.
Lydia said the law also provides exceptions for arts and entertainment services aimed at promoting traditional culture and community service interests. He said that these sectors should not even be taxed.
“This is part of the government's commitment to supporting national culture and preservation,” he said.
CNBC INDONESIA RESEARCH
(chd/chd)
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