Indonesia plans to impose VAT on cryptocurrency transactions and income tax on capital gains from cryptocurrency investments. The VAT and capital tax are to be 0.1% each and effective from 1 May.
All this amid a surge in interest in trading digital assets, which took place in Southeast Asia’s largest economy during the coronavirus pandemic.
Analysis by the Commodity Futures Trading Regulatory Agency shows that the number of crypto asset holders has increased to 11 million by the end of 2021. Interestingly, the total value of crypto transactions in commodity futures markets reached 859.4 trillion rupiah ($59.8 billion) in 2021, more than a tenfold increase compared to 2020.
In Indonesia, trading of cryptocurrency assets is only possible in the form of commodities and cryptocurrencies cannot be used as a form of payment.
“Cryptocurrency assets will be subject to VAT because they are goods as defined by the Ministry of Commerce. They are not currency,” – Hestu official Yoga Saksama said during a media briefing. “Therefore, we will impose income tax and VAT on them.”
The government is still working on introducing new regulations on these taxes.
The proposed VAT rate on cryptocurrency assets is much lower than the 11% imposed on most services and goods in Indonesia. In contrast, the income tax of 0.1% of the gross transaction value is the same as the tax on shares.
Indonesia enacted a broad tax law that year, which provided the legal basis for enacting taxes on digital assets. This law has the main objective of optimising revenue collection.
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01/04/2022 Mr.Advice TEAM