The Buleleng regency administration has decided not to provide tax breaks for two star-rated hotels, despite a recommendation from the Forestry Ministry and the Home Ministry.
The Waka shored and Menjangan Jungle hotels, located in the Natural Conservation Park and West Bali National Park respectively, had previously requested tax breaks for their operations.
Their petitions were backed by letters issued by Forestry Ministry in 2007 and the Home Ministry in 2009 that stipulate provincial and regional administrations must provide tax breaks for hotel operators and investors running ecotourism programs.
Both ministries also forbid local administrations from double-taxing investors and operators of hotels and facilities operating within conservation areas.
Buleleng Tax Office head Nyoman Pastika said he had already received the two letters.
However, he went on, the regional administration could not fulfill the requirements since it need more revenue from the sector to meet its tax target.
He added taxes from hotels and restaurants contributed very little to the total regional revenue.
Pastika also said both a 2009 law and a 2003 bylaw stipulated no tax breaks for hotels and restaurants.
"Taxes on hotels and restaurants are indirect taxes whose subjects are individuals or bodies that receive hotel and restaurant services," he added.
The management of the Waka Shorea Hotel has applied for a Rp 20 million tax break, while the management of the Menjangan Jungle Hotel has filed for a Rp 100 million tax break.
The management of neither hotel was available for comment.
Tourism in Buleleng is less developed than in other areas of the resort island of Bali.
The regency currently has 3,000 available rooms, a large number of them in hotels and lodgings in Lovina.
In 2008, the regency administration welcomed 350,000 overseas visitors, and the tourism industry generated Rp 4 billion from hotel and restaurant taxes.
There are 15 designated tourism areas in Bali, including Lovina in Central Buleleng and Batu Ampar in West Buleleng.
