GOVERNMENT INCENTIVES RELATED TO CULTURAL EXPRESSIONS
The Government on all levels (national, provincial, and local) have continuously found ways to develop various policies to provide financial incentives for stakeholders in the creative industries. The incentives are mostly in the form of tax exemptions with the intention:
- to increase the involvement of taxpayers in the construction of related infrastructures; and
- to increase the frequency of art and cultural events organized by the community.
In 2010, the Government introduced Government Regulation No. 93 of 2010 on Donations for National Disaster Handling, Donations for Research and Development, Donations for Education Facilities, Donations for Sports Development, and Costs for Construction of Social Infrastructures that Can Be Deducted from Gross Income. In general, this regulation will allow taxpayers to deduct a maximum of 5% from their net income for donations made to cover costs of the construction of cultural and arts facilities.
In 2014, the Government introduced the Minister of Finance Regulation No. 158/PMK.010/2015 on Criteria for Art and Entertainment Services that are Exempted from Value Added Tax (VAT). In general, this regulation stipulates tax exemption for several cultural expression activities, including viewing of films, viewing of arts, music, and dance performances, and exhibitions.
In 2015, the Jakarta Provincial Government introduced the Jakarta Local Regulation No. 3 of 2015 on Entertainment Taxes. In general, this regulation allowed for:
- VAT reduction of up to 0% tax rate for any free arts event;
- tax deduction of up to 0% for any local/traditional cultural event;
- tax deduction from 10% to 5% for any paid national cultural event; and
- tax increase from 10% to 15% for any paid international cultural event.
Specific expected results were not available at the time of writing this report.
State budget for the Government Regulation No. 93 of 2010 and the Minister of Finance Regulation No. 158/PMK.010/2015 and the Jakarta Provincial budget for the Jakarta Local Regulation No. 3 of 2015, although exact numbers were not available during information collection.