- Cryptocurrency trading in Indonesia will be subject to a 0.1% VAT and income tax on transactions, beginning next month
- The move is in line with the nation’s tax reforms last year following its economic recovery from the COVID-19 pandemic
Indonesia will begin taxing crypto transactions by way of VAT and income tax next month in a move that could net the government additional revenue from domestic trading activity.
According to a report by Reuters on Friday, the archipelago, which is made up of more than 17,000 islands, will begin charging 0.1% on both value-added tax and income tax by May 1.
“Crypto-assets will be subject to VAT because they are a commodity as defined by the trade ministry,” tax official Hestu Yoga Saksama told a media conference last week. “They are not a currency … so we will impose income tax and VAT.”
VAT is a form of taxation applied to goods and services at every step along the supply chain or sale to end consumers. Indonesia’s rate of 0.1% is significantly lower than the 11% it charges for other products. By comparison, Australia levies a rate of 10% while the US has a sales tax set at the state level ranging from 0%-11.5%.
The move follows the country’s wide-ranging tax reforms last year — amid the nation’s economic recovery from the COVID-19 pandemic — which included provisions to tax profits on crypto trading activity.
Indonesia’s government is still working on the implementation of those regulations, said Saksama as cited in the report.
Like other Asian nations within the region including Thailand and Vietnam, crypto for use in payments is outlawed though Indonesians are allowed to trade them as a commodity.
Indonesia is South-East Asia’s largest economy, according to data by The World Bank. The nation is also the world’s fourth-largest largest with a population exceeding 273 million people across 300 groups.
Out of that, it is estimated more than 2.6% or 7.2 million individuals currently owning some form of crypto, data by payments provider Triple A shows.
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