Entertainment complexes refuse to pay tax

JAKARTA (JP): Entertainment tax revenue has fallen eight percent because many entertainment complexes have refused to pay, a city councilor said yesterday.

Helmy A.R. Syihab, chairman of Commission C for City Revenue, said the places which refused to pay were mostly sports and recreation centers.

Sports and recreation centers have to a pay 10 percent tax because they are categorized as entertainment sites.

A city rule defines entertainment as "all kinds of public activities, shows, games and all businesses which can be enjoyed" by the public.

Helmy said sports and recreation centers, particularly golf courses and swimming pools, refused to pay entertainment tax on top of the value added tax.

He said the city's target revenue from entertainment tax for the 1996/97 fiscal year was Rp 69.61 billion of which Rp 50 billion should have been collected by December. So far, only Rp 43.3 billion (US$ 18.02 million) has been collected. This is eight percent less than the Rp 50 billion target.

The central government imposes a value added tax on sports and recreation centers because the centers rent their space and facilities to consumers.

Helmy said Pondok Indah Golf and Country Club in South Jakarta had not paid because its management said it already had to pay the central government value added tax.

"They said they do not want to pay a double tax," Helmy said.

An observer of tax issues, Nil Sonata, wrote recently in the Kompas daily that golf course operators were "restless" because of the value added tax.

Nil said the double tax problem was unclear and suggested lowering both taxes for companies which were double taxed.

The House of Representatives is debating a bill which should clarify these issues.

But regardless of what the new rules would do to tax levels, sports and recreation centers should have paid entertainment tax because existing rules were still effective, he said.

Helmy said revenue from the entertainment industry had also decreased because frequent drug raids at nightspots had discouraged visitors.

The raids by police and the public order office were part of a crackdown on ecstasy users and dealers.

"I am sure, however, that things will pick up after the use of the drugs has declined," he said. (02/ste)