UNAIR NEWS – The government has officially announced an increase in Value-Added Tax (VAT) to 12%, effective January 1, 2025. This policy has sparked widespread opposition due to its perceived adverse effects on the public. One of the most debated concerns is its impact on the use of Quick Response Code Indonesian Standard (QRIS) as a preferred payment method in today’s society.
Professor Dr. Rahmat Setiawan, SE, MM, an expert from the Faculty of Economics and Business (FEB) Universitas Airlangga (UNAIR), expressed concern that if the 12% VAT is applied to QRIS transactions, people may revert to using cash. “If QRIS transactions are subjected to a 12% VAT, people will likely go back to cash payments. Why would they choose QRIS if it incurs a 12% tax? People’s behavior is fundamentally rational, and they will always adjust accordingly,” he explained.
Prof. Setiawan expressed disappointment the potential application of the increased VAT to QRIS transactions, noting that this move contradicts the government’s and Bank Indonesia’s campaign to promote cashless transactions. The government’s broader objectives—simplifying transactions and curbing money laundering—could also be undermined by this tax increase.
“The government encourages us to adopt cashless transactions for easier payments, which, in turn, could stimulate consumption and economic growth. Additionally, cashless systems help reduce money laundering from corruption because such transactions are recorded and traceable, unlike cash payments, where finding evidence is more challenging,” he stated.
Broader impacts
Prof. Setiawan further elaborated that despite certain exemptions for specific goods, the policy creates loopholes that could affect daily essentials. “Exemptions don’t only apply to luxury items. Everyday necessities like deodorant, toothpaste, and soap—which are not luxury goods but essential for daily life—will also be subject to the 12% VAT,” he explained.
He further warned that the VAT hike could lead to higher unemployment. “Raising VAT increases the overall cost of living, which lowers purchasing power and reduces consumption. When demand decreases, production inevitably slows down, which could result in higher unemployment rates,” he said.
In conclusion, Prof. Setiawan expressed hope that the government would reconsider or postpone the VAT hike. He noted that the government has the authority to adjust VAT rates without amending the law. “The government has the discretion to lower the VAT rate to a minimum of 5% or raise it to a maximum of 15% under Article 7, Paragraph 3 of the Harmonized Tax Law (UU HPP). Thus, there is still room to maintain the current rate of 11% without needing legislative changes,” he concluded.
Author: Khumairok Nurisofwatin
Editor: Edwin Fatahuddin
