The Art Coalition found 48 regencies/cities and 1 province that exempted entertainment taxes for traditional arts. Meanwhile, for international music performances, a tax of up to 75 percent is quoted.
Jakarta - The Art Coalition has asked the government to evaluate the difference in entertainment tax figures for various art forms in the regions. Based on research conducted by this non-profit organization engaged in arts advocacy, the discriminatory percentage of entertainment taxes affects the sustainability of certain art forms. “The imposition of high taxes makes certain art forms unattractive to businesses. As a result, people's access to art is limited," said Chairman of the Kusen Alipah Art Coalition in Jakarta, July 13, 2022.
Continuing research conducted in 2019, the Art Coalition is studying regional regulations related to culture and entertainment taxes in 508 regencies/cities in Indonesia. From there the Coalition found that local governments tend to project the arts sector as an object of taxation, rather than encouraging its advancement. This condition deserves to be criticized, considering that the entertainment tax regulation itself does not yet have standardization. Whether it's about the categorization of art that is the object of tax, as well as the percentage of levies.
This lack of standardization makes certain art forms vulnerable to decline. "On the other hand, there is the potential for local governments to arbitrarily determine the particular art form they want to promote," said the Art Coalition Research Coordinator, Ratri Ninditya.
Ratri explained that of the 508 regencies/cities in Indonesia, 367 of them have local regulations on entertainment taxes. As for all these regencies/cities, only 105 regions have local regulations related to culture, and 72 of them specifically refer to the Law for the Advancement of Culture (UUPK). "From there, we can see that the regulation on art tax is three times more than the regulation for the promotion of culture," he said.
According to Ratri, there is actually nothing wrong with the existence of an entertainment tax. But ideally, the income from the entertainment tax will also be felt by art actors, to develop themselves and their ecosystem. This has been implemented in a number of countries, such as France and Switzerland, which allocate entertainment taxes to develop alternative arts that are accessible to many people.
The percentage of levies and categorization of entertainment taxes have actually been regulated in Law No. 28 of 2009 concerning Regional Taxes and Regional Levies which was updated in Law no. 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments. In the new regulation, all entertainment and arts services are included in the Certain Goods and Services Tax and are subject to a maximum tariff of 10%, except for the "discotheque, nightclub, and bar" category which is set at 40%-75%. The objects of entertainment tax are generally categorized into: 'film viewing', 'music and dance performances', 'exhibitions', 'traditional arts', and 'discotheques, karaoke, nightclubs, and the like' (for convenience, hereinafter referred to as 'night entertainment'. ').
Although the regulation gives local governments the flexibility to design entertainment tax rates, the Art Coalition considers the difference in the percentage of levies to be extreme. Types of entertainment with relatively many fans and on a larger scale, are quoted higher taxes. On the other hand, arts entertainment that lacks interest is taxed lower.
Of all the regulations found, the highest tax was found in the category of night entertainment and music performances, a subcategory of international music, which was 75%. The imposition of taxes on the category of music performances is clearly far above the provisions contained in the Act, although it is still appropriate for the category of night entertainment. In Empat Lawang Regency, South Sumatra, a 75% tax is imposed on international music performances, in contrast to national-scale music events where only a 35% tax is levied. For the night entertainment category, there are 37 regencies/cities that impose a tax of up to 75%, and 40 regencies/cities that apply a 50% tax in a single category (not separating discotheques/nightclubs and karaoke).
The scope of this unclear categorization has the potential to cause problems. For example, the government of Palangkaraya City, DKI Jakarta, and Kutai Kartanegara Regency, which classifies live music as night entertainment. Meanwhile, for the music performance category, a different tax percentage is charged. What is the difference between live music and music performances, is not explained further. DKI Jakarta also added the description of 'DJ (disk jockey)' in the category of night entertainment. The ambiguous categorization was also found in Bombana Regency and Kutai Kartanegara Regency. There, 'performance art' is separated from film, dance and music, with a different tax percentage.
In addition to the economic potential of entertainment, the imposition of tax rates is also based on 'entertainment cultural values'. The second reason appears in the category of traditional arts. Many regions provide tax relief to traditional arts because they are considered to preserve culture, have social motives, and are part of traditional or religious rituals of the local community.
We found 48 districts/cities and 1 province that exempted entertainment taxes for traditional arts. Meanwhile, the other 92 regencies/cities impose a small tax percentage for traditional arts, which is 5%. This is positive, but becomes a problem when the definition of tradition only refers to the cultural expressions of a particular group. In fact, art, as part of culture, is something that is alive and constantly changing. What about, for example, cosmopolitan art forms, which are a mixture of many cultures, such as dangdut? “If the campursari dangdut house music is performed at a nightclub, which category does it fall into? How about a tradition-based contemporary show?” said Ratri.
On the other hand, there are regions that explicitly impose high taxes on art forms that are contrary to local cultural values. Pidie Regency, for example, imposes a 50% tax on all types of arts except those with an Islamic spirit. In line with the Aceh Ulema Council's statement on the ban on cinemas, in the written regulation on the entertainment tax, Pidie cinema is also subject to a 50% tax without exception. These two policies, according to Ratri, will further deter business actors from investing in the cinema industry in Aceh.
Therefore, the Art Coalition urges local governments to immediately evaluate this difference in the percentage of entertainment tax. The government should also revise the art category which is still unclear in its definition, and make efforts to make the entertainment tax useful for the promotion of culture. "Of course, by considering the Regional Cultural Thoughts (PPKD) as a derivative of the Law for the Advancement of Culture," said Ratri. [*]*Regulation of regional regulations is supported by legalonline.com**The database of regional regulations collected by the Art Coalition can be accessed through promotions of culture.co.id
About the Art Coalition
The Art Coalition is a non-profit organization that works to build a better arts ecosystem in Indonesia. To achieve its goals, the Art Coalition advocates for art policies, encourages the creation of an arts endowment fund, and strengthens knowledge management and networking among members of the organization.
The Art Coalition bridges various stakeholders in policy advocacy to advance the arts ecosystem. The Art Coalition has succeeded in pushing the ratification of the Law on the Advancement of Culture, has also advocated for the Music Bill, compiled research on artistic freedom, and participated in capturing the aspirations of art ecosystem activists for the first National Cultural Strategy in Indonesia. The Art Coalition has also adopted the concept of a cultural trust fund so that the government in 2021 is committed to allocating IDR 3 trillion.
Members of the Art Coalition contribute to improving their respective artistic ecosystems, as well as work to mainstream art as a great asset of Indonesia. As of April 2022, the Art Coalition consists of 333 institutions and individuals spread across 24 provinces.
For further information or an interview appointment, please contact:Isma Savitri, Communication Manager of the Art Coalition - isma@koalisiseni.or.id, 081-310-130-960
Follow the latest information about art policy at:www.koalisiseni.or.id | www.pemajuankekulturan.id | Instagram @koalisiseni | Twitter @koalisiseni | FB: Art Coalition
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