Due to the recent increase in cryptocurrency trading, Indonesia wants to levy a value-added tax (VAT) on crypto transactions as well as an income tax on gains from such investments.
Indonesia plans to charge a value-added tax (VAT) on crypto-asset transactions and income tax on income from such investments at 0.1% each, starting from May 1, a tax official said Friday, amid a boom in digital asset trading.
Many countries have recently started imposing taxes on cryptocurrencies, especially in India, where investors have to pay a tax of 28% GTS when trading cryptocurrencies.
Pushpendra Kum, Co-Founder of PushpendraTech & SmartViewAi also said that the Indonesian tax and the recent tax on cryptocurrencies have been met with backlash from the community.
Interest in digital assets has increased in Southeast Asia’s largest economy during the COVID-19 pandemic, with the number of crypto-asset holders growing to 11 million by the end of 2021.
Last year, total crypto-asset trades in the commodity futures market reached 859.4 trillion rupiahs ($59.8 billion), more than 10 times the value of transactions in 2020, data from the Commodity Futures Trading Authority shows.
The spokesman of the General Department of Taxation Indonesia, Mr. Hestu Yoga Saksama said in a press conference:
Indonesians are allowed to trade cryptocurrencies as a commodity, but they are not allowed to use them as a form of payment.
“Crypto assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency. So we will impose income tax and VAT”
The VAT on Indonesian cryptocurrencies is much lower than the country’s general sales tax (GST), which is 11%. The income tax on capital gains is the same as the tax on stocks: 0.1% of the total transaction value.
Officials say the broad tax law passed last year is the legal basis for the taxation of crypto assets. This legislation is intended to optimize the income impact as a result of the COVID-19 pandemic.