The Constitutional Court on Wednesday approved a judicial review by the Indonesian Golf Association and several golf companies, stating that entertainment tax levied against the golf industry is unconstitutional.
Golf in Indonesia will now be legally classified as a sport, and subject to a different (and likely lower) realm of taxation.
“The word ‘golf’ in the Law on Regional and Retribution Tax is against the 1945 Constitution, and therefore no longer legally binding,” presiding judge Ahmad Sodiki said, as quoted by Antara.
Under the old law, golf was categorized as entertainment, and subject to similar taxes as karaoke, nightclubs, billiards, bowling, massage parlors and art performances.
The golf association and several companies complained that categorizing golf as entertainment resulted in an unfairly high taxation rate of up to 35 percent, with different regions given the discretion to set the rate at or below that number.
“Tax charges should consider all aspects, including the type of the business or event that could be subject to tax, as well as the justice . . . for tax payers,” judge Akil Mochtar said. He said that the classifying golf as a sport seemed more suitable, given that there were numerous national and international tournaments, and because people played golf for health and recreation purposes.
“Therefore, golf could not be categorized only as entertainment, and cannot be an object of entertainment taxes,” Akil said.
But one of the nine Constitutional Court judges dissented — justice Achmad Sodiki said that golf is indeed entertainment that happens to contain elements of a sport.
“Golf can not be seen as black and white,” Achmad said. “Many people like golf as entertainment for weekend recreation. [Golf] also makes efforts to lift up it’s image and enter certain respected social economic segments. It is also a communication media for friendship and business among elite people.”
Interested companies in the judicial review included Pondok Indah Padang Golf, Padang Golf Bukit Sentul, Sanggraha Daksamitra, Sentul Golf Utama, New Kuta Golf and Ocean View, Merapi Golf, Karawang Sport Center Indonesia and Damai Indah Golf.