New 40% Entertainment Tax Should Not Worry Bali Tourists Minister Says 

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As backlash grows against the Indonesian government’s decision to introduce a 40% entertainment tax, the Minister for Tourism and Creative Economies, Sandiaga Uno, has spoken out to dispel any worries industry leaders and Bali tourists may have. 

Several high-profile entertainment industry entrepreneurs have spoken out against the government’s decision to introduce a 40% entertainment tax.

This price increase will apply to certain bars, nightclubs, beach clubs, spas, and other entertainment venues. 

As concerns from business owners and tourists grow, Indonesia’s Minister for Tourism and Creative Economies, Sandiaga Uno, has assuaged fears that the new tax could destroy the entertainment and tourism industry. 

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Top Indonesian entertainment industry entrepreneurs have submitted a judicial review of the entertainment tax regulation that will see the entertainment tax rise to a minimum of 40% with a maximum of 75% at the Constitutional Court (MK).

Speaking at his weekly briefing, Minister Uno was bombarded with questions to which he called for calm.

He told reporters, “So I was given a brief from the legal team that since there is a judicial review process, let’s wait for the results of that process.”

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He added, “I convey this to my colleagues in the regional government who will implement it because regional regulations and so on must be drafted to wait in detail for what will become the Constitutional Court’s decision.”

Minister Uno added that this process at the Constitutional Court is a review of the proposed legislative changes and that nothing has come into effect as of yet.

He said, “This process has only been entered into since 3rd January, and a discussion schedule is being prepared.”

“So please be patient, and at the same time, let’s use this opportunity to discuss finding a solution that advances the creative and creative industry and can also help strengthen state finances.”

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He reminded reporters and the public that “no one has been harmed, no one has been killed. We must not be too polemical so that it creates negative perceptions [about Indonesia and the entertainment industry].”

Adding, “I’m worried that if we continue to escalate this, tourists will eventually see that there is a situation that is not conducive in Indonesia. Moreover, we are in the spotlight now that we have managed to recover.”

Minster Uno concluded, “I want to keep the narrative positive. We can invite more tourists so that the target of 14-15 million in 2024 is achieved.”

On Wednesday, 17th January, the Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, took to social media and asked regional governments to postpone the implementation of the entertainment tax.

Minister Pandjaitan echoed the concerns of business owners and tourists when he expressed his strong opinion on the tax increase.

He wrote, “I think I am very pro with it (postponing), and I see no reason for us to increase taxes from there.”

Minister Pandjaitan also wants there to be greater consideration of the impact such huge entertainment tax increases would have on Indonesian people.

While tourists could choose to visit another location with a more affordable entertainment tax (note that Thailand is reducing its entertainment tax in 2024), the possible negative impacts of this tax hike would be felt most by Indonesia’s low and middle-income earners. 

There is a feeling that increasing the entertainment tax will discourage ‘low quality’ and low-spending tourists to Indonesia’s top destinations, Bali included.

Yet, in reality, this tax would also discourage domestic tourists from exploring much of the country and see small and medium business owners in top destinations miss out on customers, affecting the livelihoods of millions of Indonesian people in the entertainment industry.

Such huge tax increases and the potential loss of customers could result in job losses, fewer working hours, or even business closures in Bali.