Badung hikes entertainment tax from 10 to 12.5 percent

The Badung administration announced an increase in entertainment tax from 10 to 12.5 percent in an apparent effort to boost its revenue.

The increase will affect entertainment establishments, such as spas, nightclubs, karaoke bars, massage parlors and discotheques. Entertainment spots operating as part of a tourism resort or hotel will be exempted from the new tariff.

Badung revenue agency head Wayan Adi Arnawa said that entertainment establishments across the regency had been informed of the increase.

“The increase was decided after a thorough process of deliberation and after taking every available factor into account,” he claimed, adding that Law No. 28/2009 on Tourism Accommodation gave the regional administration the authority to increase the tariff of certain taxes, including entertainment tax.

“The increase also aims at controlling the mushrooming of entertainment establishments in the regency,” he stressed.

Known as the richest regency in Bali, Badung earns nearly Rp 1 trillion per year from hotel and restaurant tax alone. The regency hosts some of the island’s most popular tourism destinations, including Kuta, Jimbaran and Nusa Dua. Entertainment establishments, and night spots in particular, have become a key feature of the world famous Kuta.

“The increase in the number of foreign and domestic visitors has spurred the demand for entertainment establishments. Recently, there was a significant increase in the number of new entertainment establishments, especially night spots and massage parlors,” he said.

Such increases, he pointed out, may have increased the social impact of entertainment establishments, including the likes of alcoholism and violence.

“It will also increase the competition among entertainment spot operators, some of which, I believe, have not equipped their establishments with proper licenses. These are the things we are trying to put under control,” he said.

Arnawa stressed that the entertainment establishment, operating as part and in the same location of a tourism resort or hotel, would be spared from the hike.

The Indonesian Hotels and Restaurants Association (PHRI) Badung chapter head, I Gusti Rai Suryawijaya, said the industry accepted the hike.

“The administration has received and honored our input that entertainment spots operating as part of hotels should be exempted from the hike,” he said, adding that if such spots were included in the hike, the regency’s hotel industry would lose its competitive edge.

Separately, Bali Spas Association chairwoman Lulu S Widjaja said that the hike was evidence that the regency administration did not side with the industry.

“In Kuta, most of the spas are owned and operated independently and do not have any connection with hotels or tourism resorts. This 2.5 percent increase will give them an extra burden, particularly in these difficult economic conditions. We cannot compensate the hike by immediately increasing the tariff of our services,” she said.

There are a total 296 registered entertainment establishments in Badung, including 178 spas, 44 massage parlors and 38 sports-related recreational venues.