Bali Government Contemplates Increase in Tourism Tax and New Enforcement Measures
Overview of the Tourism Tax
In an effort to enhance revenue generated from tourism, the provincial government of Bali instituted a tourism tax on Valentine’s Day, February 14, 2023. Initially set at a nominal fee, discussions have already begun regarding a potential increase to as high as $100 per visitor, aligning Bali’s tax rate with that of Bhutan, known for its significant visitor charges.
This proposal has raised questions about the practicality and enforceability of the tax, particularly as compliance from tourists has proven voluntary in its current form. Despite the establishment of tables for tax receipt collection at international arrivals, enforcement mechanisms have so far been inadequate, prompting the government to explore outsourcing enforcement to airlines.
New Enforcement Proposal
To ensure better compliance, Bali is now planning to require airlines to confirm that travelers have paid the tourism levy before they can obtain a boarding pass for international flights. This move aims to streamline the process and increase tax collection efficiency.
According to Tjok Bagus Pemayun, the Head of Bali Provincial Tourism Office, a cooperation agreement with the Society of IATA Traffic Airliners (SITA) is expected to be finalized soon. This partnership seeks to remind passengers—especially foreign tourists—of their obligation to pay the tourist tax, known as the Foreign Tourist Levy (PWA).
Pemayun emphasizes that travelers can pay the levy either before or after arriving in Bali, but they must provide proof of payment to receive their boarding pass for outbound flights. “If they can pay before arriving in Bali, that would be great,” he stated. “But if they want to pay after arriving in Bali, that’s also fine. However, if they return to their country without paying, they won’t be able to get their boarding pass. They have to pay first.”
Financial Implications and Goals
With this new system, the Bali government aims to optimize the collection of the PWA, estimating that effective enforcement could lead to compliance rates of as high as 95 percent for passengers utilizing SITA. Last year, Bali exceeded its target collection of IDR 250 billion, achieving over IDR 318 billion, demonstrating the potential success of the new rules.
Challenges of Implementation
While the proposed changes appear promising, challenges remain. The requirement for airlines to verify tax payment adds a layer of complexity to the boarding process, raising concerns about the feasibility of enforcement. Many passengers utilize online check-in and automated gates that may not involve direct contact with airline personnel before boarding, potentially complicating verification efforts.
Additionally, the tourism tax applies to international visitors arriving on domestic flights, further complicating the logistics of ensuring compliance among all travelers. Some observers suggest that an accommodation tax, integrated into hotel bills, might provide a more straightforward solution to collecting the tax, akin to practices seen in various other jurisdictions.
Conclusion
As Bali’s government moves forward with plans to increase the tourism tax and establish new enforcement measures, both tourists and stakeholders in the travel industry will be watching closely. While the tourism tax presents a small hurdle for visitors to the island, it is evident that the government seeks to balance revenue generation with a smooth travel experience for all who visit. With anticipated improvements to the visitor experience through systems such as the electronic Visa on Arrival (e-VOA), Bali is dedicated to maintaining its position as a top travel destination while enhancing compliance with taxation policies.
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