Credit card scrutiny
31 May, 2016, 12:00 am
INDONESIA’S plan to track all credit card transactions in a bid to crack down on rampant tax evasion is pushing people back to cash, stifling government efforts to track illicit money flows.
A new government decree requiring credit card providers to submit transaction details — including customer and merchant identities — to the tax office as of May 31 appears to be spooking consumers with card activity falling in April.
The return to paper currency in the already heavily cash-based economy is a temporary setback not only for the government’s drive to boost tax revenues but also its fight against money laundering, corruption and terrorism finance.
And for consumers wary of increasing scrutiny on their transactions, a preference for paper means carrying around envelopes full of hundreds of bank notes in a country where the largest currency denomination is 100,000 rupiah ($F15.60).
Erwin Karya, a Jakarta-based associate director with real estate agent Ray White, said clients were now starting to use cash instead of card to pay property booking fees — non-refundable deposits used to book properties before home downpayments.