Tax Incentives to Reinstate Tourism Post the COVID-19 Pandemic

Abstract

The COVID-19 pandemic has brought about a great disruption in the value chain of businesses through the implementation of social and physical distancing policies, thereby affecting several aspects of Indonesian economy. One of the severely affected sectors is the tourism sector. To reduce the impact on tourism businesses, the government of Indonesia have provided them with an economic stimulus in the form of tax incentives. Thus, the current study investigated the impact of implementing tax incentives in the tourism sector from the post-COVID-19 pandemic standpoint. A descriptive qualitative research was conducted. Data were obtained from the Central Statistics Agency (BPS), the World Travel and Tourism Council (WWTC), the director-general of taxes, the articles on tax incentives in the tourism industry, as well as laws and regulations related to taxation and tourism. The analysis of data was done in three stages of analytical techniques – data collection, data reduction, and conclusion withdrawal. The results showed that the benefits of tax incentives for tourism businesses were to decrease in rates up to the exemption of income tax and to maintain the stability of the cash flow of tourism businesses. Furthermore, this policy will particularly help the businesses that have stopped operating either temporarily or permanently to get back on their feet.
 Keywords: tax incentives, tourism industry, COVID-19