Entertainment tax cut to boost hotel business

JAKARTA (JP): The reduction of entertainment taxes from 25 percent to 15 percent, based on a new tax regulation, will benefit hotels by increasing the numbers of customers to discotheques, bars and other entertainment venues at hotels.

The chairman of Jakarta's Hotel Controllers Association, Diyak Mulahela said Tuesday that the new regulation, to be effective April 1 this year, clearly stipulated which transactions were subject to entertainment taxes, although he did not give details.

"Moreover, the reduction of the taxes would lead to a reduction of food and beverage prices," Diyak was quoted by Antara as saying.

The new provincial regulation No. 7/1996 on the arrangement of establishments and entertainment taxation will replace the old provincial decree No. 1/1986.

Helmy AR Syihab, chairman of Commission C for financial affairs, told The Jakarta Post yesterday that the new decree was made to help businessmen.

"Nowadays people can buy advanced technology and enjoy entertainment like karaoke and home-audio visual studios at their homes. This has had a heavy impact on entertainment businesses," Helmy said.

He said the decree was passed last year.

Diyak said hotels and their entertainment venues sold food and drink at higher prices due to the 25 percent tax. "This inflicted losses on consumers," he said.

Diyak, who is also director of the Tourism Information Development Institute, said that karaoke bars, music rooms and cafes managed by hotels and restaurants would be subject to 10 percent tax. "While a 15 percent tax will be imposed on those managed by other parties," he said.

In this way, he said, the new decree would benefit visitors to the entertainment centers.

According to December 1996 records, Jakarta has 244 hotels with 21,278 rooms, 15,107 in star-rated hotels. (sur/ste)