Legal counsel Mohammad Ahmadi conveying the revisions to the judicial review petition of the Law on Financial Relations between Central-Regional Governments, Monday (3/4/2024). Photo by MKRI/Panji

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JAKARTA (MKRI) — The Petitioners of case No. 19/PUU-XXII/2024 have revised the judicial review petition of Article 55 paragraph (1) letter l and Article 58 paragraph (2) of Law No. 1 of 2022 on Financial Relations Between the Central and Regional Governments (HPPD Law). They added more elaboration on potential constitutional impairment due to the inclusion of spa as part of the entertainment business subject to specific goods and services tax (PBJT), which has been set at 40-75%.

Legal counsel Mohammad Ahmadi said that the impairment has both economic and social impacts. He asserted that Article 55 paragraph (1) letter l and Article 58 paragraph (2) of the HPPD Law has impaired the Petitioners’ effort to develop the spa business, which is mostly MSMEs, as a cultural legacy in traditional medicine. He argued the provision that puts it in the same category as discotheques, karaoke, nightclubs, and bars has painted a negative picture of it.

“The economic loss due to the imposition of a high tax rate of 40 percent could potentially lead spa businesses to bankcruptcy,” he said before Constitutional Justices Arief Hidayat (panel chair), Anwar Usman, and Arsul Sani at the petition revision hearing on Monday, March 3, 2024.

Ahmadi also asserted that the spa business could potentially be subjected to both value added tax (PPN) and PBJT. The potential bankruptcy could also lead to layoffs.

The Petitioners had also revised their explanation of legal standing, the Court’s authority, the reasons for the petition, as well as the petitum—where they request that Article 55 paragraph (1) letter l and Article 58 paragraph (2) of the HPPD Law be declared unconstitutional. They ask that the Court interpret the articles without the phrase “and steam baths/spas.”

Also read: Business Owners Ask Spa to Be Excluded from Art and Entertainment Category

The Petitioners believe both norms are in violation of Article 28D paragraph (1) and Article 28H paragraph (1) of the 1945 Constitution. Article 55 paragraph (1) letter l of the HPPD Law reads, “Art and entertainment services as referred to in Article 50 letter e include: l. Discotheques, karaoke, nightclubs, bars, and steam baths/spas.” Article 58 paragraph (2) reads, “Specifically, PBJT rates for entertainment services at discotheques, karaoke, nightclubs, bars, and steam baths/spas are set at a minimum of 40% (forty percent) and a maximum of 75% (seventy-five percent).”

The Petitioners feel they were disadvantaged because their spa business, which is in the health category, has been categorized as providers of art and entertainment services alongside discotheques, karaoke, nightclubs, and bars. Consequently, they must pay 40-75% PBJT imposed by the regional government. Meanwhile, only 10% PBJT is imposed on massage and reflexology businesses.

The Petitioners oppose the categorization of steam baths/spas in the art and entertainment category alongside discotheques, karaoke, nightclubs, and bars. They feel this injustice impacts the public since spa business owners would impose the PBJT on all spa services to customers. This would lead to declining interest in body care through spa. Therefore, the ask that the articles being petitioned be declared unconstitutional.

Author       : Mimi Kartika
Editor        : Lulu Anjarsari P.
PR            : Tiara Agustina
Translator  : Yuniar Widiastuti (NL)

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.

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