Payment ID and Its Tax Implications

Payment ID and Its Tax Implications

To mark the 80th anniversary of Indonesia’s Independence Day, Bank Indonesia (BI) had initially planned to launch Payment ID. However, BI later confirmed that the launch would not take place as scheduled. 

According to BI’s Head of Payment System Policy Department, Dicky Kartikoyono, Payment ID transactions are still undergoing trials. While the rollout did not happen in August 2025, BI announced that Payment ID will instead be piloted in September 2025 for the non-cash social assistance program in Banyuwangi, East Java. Little is publicly known about this new payment system. This article will therefore outline what a Payment ID is and explore its potential tax implications. 

Understanding Payment ID

Broadly speaking, Payment ID is a unified digital payment identity. It is a unique identifier that consistently links each payment transaction to a user’s identity across all channels, including bank accounts, e-wallets, cards, and QRIS.

Payment ID’s principle is simple. It contains one identity per person for all transactions. This system is expected to simplify the verification and monitoring of transaction histories, while also supporting government services and promoting financial inclusion. In Indonesia, Payment ID is envisioned as a unique code connected to a national identification number (Nomor Induk Kependudukan/NIK), subject to user consent.

The initiative is part of the 2025 Indonesian Payment System Blueprint, which establishes Digital ID and Payment ID as the backbone of national payment integration. It is also grounded in BI Regulation Number 4 of 2025 on Payment System Policy.

Payment ID is designed with four main objectives. First, to improve data integrity and transaction traceability. Second, to strengthen fraud prevention and protection against social engineering. Third, to support interoperability across payment service providers. Fourth, to expand financial inclusion by simplifying the onboarding and verification process. 

For consumers, Payment ID reduces the need to repeatedly disclose sensitive information, such as bank account numbers. It also simplifies refund/chargeback and payment tracking, and can accelerate access to financial services (e.g., microloans and microinsurance) by providing a clear transaction record.
For merchants and service providers, Payment ID offers faster reconciliation, lowers the risk of misdirected payments, and improves KYC/AML compliance through more accurate data matching.

To put it simply, the Payment ID work process can be summarized in five steps:

1. Issuance/registration of a Payment ID linked to a validated identity, such as NIK, via payment service providers/BI.
2. Linking the Payment ID to various instruments (bank accounts, e-wallets, cards, QRIS).
3. Consent-based authorization when the Payment ID is used, such as a phone notification for access approval. 
4. Transmission and verification (e.g., name and ID check) before funds are transferred. 
5. Data-rich logging (ISO 20022) for risk monitoring and analytics. This framework aligns with BI’s public communications and mirrors proxy addressing practices already adopted in other countries.

Lessons from Other Countries

Several countries have implemented similar identity-linked payment systems. India, for instance, uses a Virtual Payment Address (VPA) as a transaction identifier, allowing 24/7 transfers without sharing bank account details. VPAs are a strong example of alias-based payments.

On the other hand, Singapore introduced PayNow, which links bank accounts to mobile numbers, enabling transfers using simple identifiers. Similarly, Thailand launched PromptPay, which allows citizens to link their ID or mobile number to a bank account for real-time, low-cost transfers.

Tax Implications

Under Article 2 of Law of the Republic of Indonesia Number 7 of 2021 concerning the Harmonization of Tax Regulations, the government stipulates that the taxpayer identification number (Nomor Pokok Wajib Pajak/NPWP) for Indonesian residents is their NIK.

On top of that, Minister of Finance Regulation (Peraturan Menteri Keuangan/PMK) Number 112 of 2022 concerning NPWP for Individual Taxpayers, Corporate Taxpayers, and Government Agency Taxpayers, as last amended by PMK Number 136 of 2023, sets out six administrative services that require the use of NIK as the NPWP, including:

1. disbursement of government funds;
2. export and import services;
3. banking and other financial services;
4. business establishment and licensing services;
5. government administration outside the Directorate General of Taxes (DGT); and
6. other services requiring NPWP.

If Payment ID, which also uses NIK, is adopted as a national transaction gateway, several tax implications may follow.

First, by integrating and aligning Payment ID data with the tax system—both of which use the NIK as their primary database—it will become much easier for tax authorities to track taxpayers’ financial transactions. In practice, this could mean that the DGT will increasingly issue Requests for Explanation of Data and/or Information to taxpayers regarding their reported activities.

Second, some taxpayers may attempt to avoid such monitoring by using Payment IDs that do not belong to them. For example, a business owner might conduct personal transactions using an employee’s Payment ID to deliberately obscure their financial activities from the DGT.

Third, there is also the risk that taxpayers will shift their activities away from digital transfers, Payment ID gateways, or QRIS, and instead revert to cash transactions. Such behavior would be motivated by an effort to evade detection by tax authorities. If this occurs, it could reflect a lack of public trust in the government’s handling of the system.