Amid the global adoption of cryptocurrencies, Indonesia is considering charging value-added tax (VAT) on crypto-asset transactions along with an income tax on capital gains from crypto investments. From May 1, such crypto transactions and investments will be subjected to a 0.1% tax each.
Under this tax regime, Indonesians are allowed to trade crypto assets as a commodity but not to use them as a means of payment. The VAT rate on crypto-assets will be below 11% levied on most Indonesian goods and services. Also, the income tax on capital gains at 0.1% of gross transaction value, matches that on shares.
According to a spokesperson for Indonesia’s tax office, Hestu Yoga Saksama, the government will be imposing income tax and VAT as crypto assets are a commodity as defined by the Trade Ministry and “not a currency”.
The legislation has laid the groundwork for collecting revenue on crypto transactions in response to the pandemic-hit economy. Despite that, the government is still contemplating how to implement such taxes.
During the pandemic, the use of cryptocurrency grew in Southeast Asia’s largest economy, bringing the total number of crypto asset holders to 11 million. In addition, crypto transactions in the country reached 859.4 trillion rupiah – around $59.8 billion.
Indonesia has long planned to build a legal framework for cryptocurrencies, owing to the rapid growth of cryptocurrencies.
Indonesia’s Commodity Futures Trading Regulatory Agency, Bappedbti in December 2020, recognized over 200 cryptocurrencies as commodities, which could be legally traded. Additionally named 13 exchanges as licensed crypto businesses in February 2021.
