Java-Based QRIS Payments to See 12% Value Added Tax Increase in 2025
The Indonesian government has officially announced a rise in Value Added Tax (VAT) on Java-based Quick Response Code Indonesian Standard (QRIS) payments, effective January 1, 2025. This shift will impact transactions conducted using the country’s popular QR code standard.
Until now, VAT has primarily targeted certain sectors. However, this new policy introduces a 12% VAT on QRIS-based transactions, a change that has sparked conversation and concern among economists.
Professor Dr. Rahmat Setiawan, SE, MM, from the Faculty of Economics and Business at Airlangga University (FEB Unair), believes the increased VAT on QRIS transactions could lead consumers to revert to cash payments. "If QRIS transactions are subject to a 12% VAT, customers may opt for cash again. Why choose QRIS if it ultimately attracts a higher VAT?" he explained.
Prof. Setiawan condemns the government’s decision to impose a 12% VAT on QRIS transactions, stating that it contradicts their efforts to promote non-cash transactions. "The government encourages non-cash transactions to boost economic growth and combat money laundering," he pointed out, referring to the government’s and Bank Indonesia‘s joint campaign to increase non-cash transactions.
Moreover, the economist predicts that this VAT increase could impact daily necessities and potentially contribute to unemployment. "Items like deodorant, toothpaste, and soap aren’t just luxuries; they’re daily essentials, and now they’re subject to a 12% VAT," he stated. He also expressed concern that a decrease in consumption due to the increased VAT could lead to job losses.
Prof. Setiawan urges the government to reconsider or postpone the VAT hike, suggesting they could use their existing authority to cap the VAT at 11% without amending the law. "The government can lower or raise the VAT to a maximum of 15% without changing the law," he concluded.
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