Ruling hearing for the judicial review of the Law on Financial Relations between the Central and Regional Governments, Friday (1/3/2025). Photo by MKRI/Panji.
JAKARTA (MKRI) — The Constitutional Court (MK) partially granted the petition for Case No. 19/PUU-XXII/2024 concerning the judicial review of Article 55 paragraph (1) letter l of Law No. 1 of 2022 on Financial Relations between the Central Government and Regional Governments (HKPD Law) regarding the provision that steam baths and spas fall into the category of entertainment services. However, in this decision, the Court interpreted steam baths and spas in the a quo article as part of traditional health services.
“Therefore, the phrase ‘and steam baths or spas’ in the norm of Article 55 paragraph (1) letter l of Law No. 1 of 2022 is conditionally unconstitutional as long as it is not interpreted as ‘part of traditional health services,’” said Constitutional Justice Arief Hidayat when reading out the considerations for Decision No. 19/PUU-XXII/2024 on Friday, January 3, 2025.
According to the Court, the classification of steam baths or spas in the article—which are equated with discotheques, karaoke, night clubs, and bars—does not guarantee legal certainty for steam baths or spas as traditional health services. It has raised concerns and fears over the use of the traditional health services. Putting “steam baths or spas” in the same group as discotheques, karaoke, night clubs, and bars makes it a type of show, game, skill, or recreation to be enjoyed, which is what traditional health services are. Thus, it has caused losses for the Petitioners in the form of negative stigma.
Justice Arief explained that traditional health services have a clear and consistent legal basis through Law No. 36 of 2009 on Health and Law No. 17 of 2023 on Health with further regulations contained in implementing regulations such as Government Regulation (PP) No. 103 of 2014 and PP No. 28 of 2024. This service is recognized as an integral part of the national health system that includes promotive, preventive, curative, rehabilitative, and palliative aspects. This recognition shows the importance of traditional health services in meeting society’s needs, especially in maintaining the sustainability of local wisdom. In this context, services such as steam baths and spas that have health benefits from local-based traditions should be considered traditional health services.
Without intending to assess the legality of the Minister of Health Regulation No. 8 of 2014 on Spa Health Services, it has been determined that spas are health services carried out holistically by combining various types of traditional and modern healthcare. The service use water and other supporting treatments such as massage using herbs, aroma therapy, physical exercise, color therapy, music therapy, and food to provide therapeutic effects through the five senses in order to achieve balance between body, mind, and soul to achieve optimal health conditions. With this regard, spa services are divided into health spa and wellness spa as an effort to provide promotive and preventive health services and medical spa as an effort to provide curative and rehabilitative health services.
“Thus, the Petitioners’ argument was well founded. However, because the Court’s interpretation is not as requested by the Petitioners, the argument of the a quo Petitioners is legally justified in part,” said Justice Arief.
Meanwhile, the Petitioners’ argument regarding the phrase “and steam baths or spas in Article 58 paragraph (2) of the HKPD Law,” which stipulates a 40-75% tax on steam baths or spas—the same as the entertainment group of discos, karaoke, night clubs, and bars—is an act of injustice and discrimination was declared legally unfounded. The amount of the tax rates for steam bath or spa questioned by the Petitioners are under the legislatures’ prerogative, as mandated by Article 23A of the 1945 Constitution.
In addition, under Article 3 of the Regulation of the Minister of Finance No. 70/PMK.03/2022, regional tax objects and regional levies for arts and entertainment services are exempt from value added tax (VAT). Therefore, there is no double taxation as argued by the Petitioners. Thus, the Petitioners’ argument the potential double taxation that could directly impact the sustainability of traditional health service businesses was legally groundless.
Decision Applies to Cases 31, 32/PUU-XXII/2024
In addition to Case No. 19/PUU-XXII/2024, the Court pronounced a decision for Cases No. 31/PUU-XXII/2024 and 32/PUU-XXII/2024, which had the same issues. Therefore, the Decision No. 19/PUU-XXII/2024 applies mutatis mutandis those cases.
Decision 31/PUU-XXII/2024
The Petitioner for case No. 31/PUU-XXII/2024 challenged the same substance of Article 58 paragraph (2) of the HKPD Law, which the Court had decided for Case No. 19/PUU-XXII/2024. The Petitioners wanted the amount of the specific goods and services tax (PBJT) rates not be treated as special, including the potential of double taxation on PBJT. Thus, based on these legal facts, the Court’s legal considerations in Decision No. 19/PUU-XXII/2024 relating to Article 58 paragraph (2) of the HKPD Law apply mutatis mutandis in response to these arguments.
In addition, the Court held that the phrase “quite clear” in the elucidation to the article is not contrary to the principles of self-improvement as well as recognition, guarantee, protection, fair legal certainty, and equality before the law, convenience and special treatment for the same opportunities and benefits, and freedom from discriminative treatment as regulated in the 1945 Constitution. Thus, the Petitioners’ argument was legally groundless in its entirety.
Decision 32/PUU-XXII/2024
Likewise, Case No. 32/PUU-XXII/2024 share the same substance. Thus, based on this legal fact, the legal considerations in the Decision No. 19/PUU-XXII/2024 relating to Article 58 paragraph (2) of the HKPD Law mutatis mutandis applies as the legal considerations for the arguments of the a quo petition.
According to the Court, it has been proven that the phrase “Specifically, PBJT rates for entertainment services at discos, karaoke, night clubs, bars, and steam baths/spas are set at a minimum of 40% and a maximum of 75%” in said article does not contradict with financial relations, public services, utilization of natural resources and other resources between the central and regional governments; the principle of decent work and livelihood for humanity; the principle of recognition, insurance, protection, fair legal certainty, and equality before the law; the principle of protection for one’s self, family, honor, dignity, and property; and the right to a sense of security and protection from the threat of fear to do or not do something that is a basic human right; the principle of freedom from discriminatory treatment as regulated by the 1945 Constitution, not as argued by the Petitioners. Thus, the Petitioners’ arguments were legally groundless in their entirety.
Also read:
Business Owners Ask Spa to Be Excluded from Art and Entertainment Category
Petitioners: Spa Businesses Could Go Under Due to 40 Percent Tax
Karaoke Bar Owner Challenges Provision on Entertainment Tax
Karaoke Bar Owner Revises Petition on Entertainment Tax
Business Owners Questions Entertainment Tax Rates
Business Owners Ask Entertainment Tax Be Capped at Ten Percent
Govt: High Tax Rates for Discotheques and Spas as Non-Basic Needs
Expert: SPA Is a Health Service, Not Entertainment
Expert: Same Tax Rates on Different Entertainment Services Unfair
Expert: High Services Tax Creates Domino Effect Including Rising Unemployment
Expert Explains Why Steam Bath or Spa Qualifies for Entertainment Tax
Govt’s Expert: Special Tax Rate on Spa and Karaoke Non-Discriminatory
Case No. 19/PUU-XXII/2024 was filed by legal entity associations (Petitioners I and II), private legal entities (Petitioners III-IX), and individuals (Petitioners X-XXII) owning spa businesses. The case No. 31/PUU-XXII/2024 was filed by Santoso Setyadji, owner of a family karaoke business. petition No. 32/PUU-XXII/2024 was filed by business owners who represent six legal entities in tourism and service/entertainment: central executive board of the Indonesian Tourism Industry Association (DPP GIPI), PT Kawasan Pantai Indah, CV Puspita Nirwana, PT Serpong Abadi Sejahtera, PT Citra Kreasi Terbaik, and PT Serpong Kompleks Berkarya. They admitted to have had constitutional impairment due to the enforcement of Article 58 paragraph (2) of the HKPD Law, which regulates 40-75% specific goods and services tax (PBJT) on discotheques, karaoke, nightclubs, bars, and steam baths or spas.
Author : Mimi Kartika
Editor : Lulu Anjarsari P.
PR : Tiara Agustina
Translator : Syifa Amelia/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.
Friday, January 03, 2025 | 21:49 WIB 4