A tax official said on Friday that Indonesia proposes to levy a 0.1 percent value-added tax (VAT) on crypto asset transactions and a 0.1 percent income tax on capital gains from such investments starting May 1, citing a surge in digital asset trading.
During the COVID-19 pandemic, interest in digital assets soared in Southeast Asia’s largest economy, with the number of cryptocurrency asset holders rising to 11 million by the end of 2021.
According to data from the Commodity Futures Trading Regulatory Agency, total crypto asset transactions in commodity futures markets reached 859.4 trillion (approximately Rs. 4,54,440 crore) last year, rising more than tenfold from 2020’s transaction volume.
Crypto assets can be traded as a commodity in Indonesia, but they cannot be used as a form of payment, Reuters reports.
“Because cryptocurrency is a commodity as defined by the commerce ministry, it will be subject to VAT. They are not a form of payment “Hestu Yoga Saksama, the official, told a press conference. “As a result, we’ll levy income tax and VAT.”
He said that the administration is currently working on the tax’s implementing regulation. The VAT rate on crypto assets is much lower than the 11% rate on most Indonesian products and services, while the income tax on capital gains, at 0.1 percent of gross transaction value, is similar to that on shares.
The legal basis for taxes on crypto assets, according to officials, is a broad tax reform passed last year. The goal of the law was to improve revenue collection in the wake of the COVID-19 outbreak.