Indonesia imposed VAT, Income Tax on Crypto Gains
Indonesia has decided to bring Crypto gains under the Income Tax umbrella. Indonesians are allowed to trade crypto assets; however, they cannot use this as means of payment.
Indonesia to tax Crypto gains
On April 1, the Indonesian government announced the imposition of income tax at 0.1 percent on crypto income and VAT on crypto purchases. Both taxes would be applicable from May 1. The government is still working on the framework for implementation of tax regulations.
A wide ranging tax law was passed last year to optimise revenue collection that was hit by the aftermath of the Covid-19 pandemic. That law became the legal basis for tax on crypto earnings. However, the VAT is still well below the 11 percent levied on most Indonesian goods and services.
The rationale behind imposing tax
Interest in digital assets surged during the Covid-19 pandemic. The total number of crypto asset holders in Indonesia crossed 11 million by the end of 2021. According to the data from Commodity Futures Trading Regulatory Agency, last year total crypto asset transactions in commodity futures markets reached 859.4 trillion rupiahs ($59.8 billion). This figure is up more than 10 times from 2020’s transaction value.
In a media briefing, the government official, Hetsu Yoga Satsama said, “Crypto assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency,” hence the decision to impose Tax and VAT on Crypto assets gains. He also told the media that the Indonesian government is still working on the implementing regulation for the taxes.
Crypto assets are considered as a commodity and not a currency in Indonesia.
