Legal counsels Annee William Siadari and Adong Simanjuntak conveying the revisions to the petition, Wednesday (3/13/2024). Photo by MKRI/Panji.

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JAKARTA (MKRI) — The material judicial review of Law No. 1 of 2022 on Financial Relations Between the Central and Regional Governments (HKPD Law) continued on Wednesday, March 13, 2024 to examine the revised petition. The case No. 31/PUU-XXII/2024 was filed by Santoso Setyadji, owner of a family karaoke business. He challenges Article 58 paragraph (2) and the elucidation to Article 58 of the HKPD Law.

The Government has officially implemented the average effective rate for Income Tax Article 21 (PPh 21) per January 1, 2024. The provision has been regulated in Article 58 paragraph (2) of the HKPD Law, which 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).”

In a hearing presided over by Chief Justice Suhartoyo and Constitutional Justices Enny Nurbaningsih and Arsul Sani, the legal counsel Annee William Siadari conveyed that the Petitioner had made revision on the power of attorney, specifically the signature on the letter of power of attorney, which had been corrected and replaced. “On the evidence we also added the Petitioner’s taxpayer identity, which includes the his [tax identification number (NPWP)], tax return letter, and proof of PBJT payment,” he explained.

Meanwhile, legal counsel Adong Simanjuntak said in elaborating his legal standing, the Petitioner outlined the facts. He added that the petition’s background and the legal provision being reviewed are still the same.

Also read: Karaoke Bar Owner Challenges Provision on Entertainment Tax

The Petitioner argues that the a quo article is unconstitutional. He believes the HKPD Law contains a change in specific goods and services tax (PBJT) on arts and entertainment, which he says is discriminatory. Prior to the provision’s enactment, business owners had paid taxes to the regional government following existing regulations. The Petitioner argues that the latest PBJT tariff of at least 40% would impact his consumers, who would bear the brunt of the increase. He believes consumers would think twice about the costs of goods and/or services they purchase, as the costs would not include the high tax.

Therefore, the Petitioner requests that the Court add the phrase “except for family karaoke business” in Article 58 paragraph (2) of the HKPD Law and to declare Article 58 of the HKPD Law unconstitutional and not legally binding.

Author       : Utami Argawati
Editor        : Lulu Anjarsari P.
PR            : Fauzan Febriyan
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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