The Indonesian government has unveiled plans to charge a value-added tax (VAT) on cryptocurrency transactions and capital gains at a rate of 0.1% from May 1 2022 amid a boom in digital asset trading. VAT is a flat type of tax that is assessed incrementally.
The news has been confirmed by an Indonesian tax official known as Hestu Yoga Saksama.
“Crypto assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency” Saksama stated. He also expressed that the government is still working on implementing regulation for the taxes.
The VAT rate on cryptocurrency assets is below the 11% levied on Indonesian goods and services, while the income tax on capital gains (at 0.1% of gross transaction value) matches that of shares. It is worth noting that Indonesians are allowed to trade crypto assets as a commodity but not to use them as a means of payment.
In addition, the Indonesian Financial Services Authority (OJK) has made it clear that financial institutions are prohibited from using or marketing cryptocurrency.
As it currently stands, cryptocurrency trading in Indonesia is regulated by the Commodity Futures Trading Regulatory Agency which issued an approved legal list of 229 crypto assets that can be used for trading on registered exchanges.
Interest in digital assets surged in Southeast Asia’s largest economy during the Covid-19 pandemic, with the number of crypto asset holders jumping to 11 million by the end of last year. In fact, it was reported that as many as 7.4 million Indonesians had invested in crypto by July 2021, double the number of a year earlier.