Indonesia plans VAT, income tax on crypto transactions
The Indonesian government will charge value-added tax (VAT) on crypto transactions and income tax on capital gains from crypto investments at 0.1% each, starting from May 1, Reuters cited a tax official as saying.
The move comes as the Covid-19 pandemic has boosted trading in digital assets in Southeast Asia’s largest economy, with the number of crypto asset holders reaching 11 million by the end of 2021.
“Crypto assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency, so we will impose income tax and VAT,” the official, Hestu Yoga Saksama, told a media briefing on April 1.
The VAT rate on crypto assets is well below the 11% levied on most Indonesian goods and services, while the income tax on capital gains, at 0.1% of gross transaction value, matches that on shares.
New tax law to support economic recovery after pandemic
A wide-ranging new tax law passed last year was the legal basis for taxes on crypto assets. That law is aimed at optimising revenue collection hit by the aftermath of the Covid-19 pandemic.
Total crypto asset transactions in Indonesia’s commodity futures markets last year reached 859.4 trillion rupiah ($59.8 billion), up more than ten times from 2020’s transaction value, the newswire referred to data from the country’s Commodity Futures Trading Regulatory Agency.
Crypto is legal to trade, but not pay
Cryptocurrencies were legalised in Indonesia in September 2018 when the trade ministry approved the trading of Bitcoin and other crypto assets as commodities. This means that for Indonesians it is legal to trade crypto assets as a commodity but not to use them as a means of payment.
Furthermore, the Indonesian regulator has banned financial firms from facilitating crypto sales, i.e. they are not allowed to offer and facilitate sales of crypto assets. Instead, this can be done through registered global crypto brokerages such as Coinbase, Binance, Kraken or Gemini or approved domestic exchanges, among them Pintu, Indodax, Rekeningku, Triv, Luno and Binance-backed Tokocrypto.
Islamic scholars insists crypto it “haram”
One problem, however, is still unsolved. As a Muslim-majority country, a debate between Islamic organisations whether to rule crypto assets to be halal (permissible) or haram (forbidden) has resulted in classifying them as the latter due to elements of “uncertainty, wagering and harm” based on several considerations, including the prevalence of fraud.
Furthermore, Indonesia’s top Islamic scholarly body, the National Ulema Council, concluded that trading of crypto as a digital commodity does not meet other requirements of Islamic financial law because it lacks necessary elements such as having a physical form and intrinsic value, being proprietary and able to be handed over to the buyer.
The Indonesian government will charge value-added tax (VAT) on crypto transactions and income tax on capital gains from crypto investments at 0.1% each, starting from May 1, Reuters cited a tax official as saying. The move comes as the Covid-19 pandemic has boosted trading in digital assets in Southeast Asia's largest economy, with the number of crypto asset holders reaching 11 million by the end of 2021. “Crypto assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency, so we will impose income tax and VAT,” the official,...
The Indonesian government will charge value-added tax (VAT) on crypto transactions and income tax on capital gains from crypto investments at 0.1% each, starting from May 1, Reuters cited a tax official as saying.
The move comes as the Covid-19 pandemic has boosted trading in digital assets in Southeast Asia’s largest economy, with the number of crypto asset holders reaching 11 million by the end of 2021.
“Crypto assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency, so we will impose income tax and VAT,” the official, Hestu Yoga Saksama, told a media briefing on April 1.
The VAT rate on crypto assets is well below the 11% levied on most Indonesian goods and services, while the income tax on capital gains, at 0.1% of gross transaction value, matches that on shares.
New tax law to support economic recovery after pandemic
A wide-ranging new tax law passed last year was the legal basis for taxes on crypto assets. That law is aimed at optimising revenue collection hit by the aftermath of the Covid-19 pandemic.
Total crypto asset transactions in Indonesia’s commodity futures markets last year reached 859.4 trillion rupiah ($59.8 billion), up more than ten times from 2020’s transaction value, the newswire referred to data from the country’s Commodity Futures Trading Regulatory Agency.
Crypto is legal to trade, but not pay
Cryptocurrencies were legalised in Indonesia in September 2018 when the trade ministry approved the trading of Bitcoin and other crypto assets as commodities. This means that for Indonesians it is legal to trade crypto assets as a commodity but not to use them as a means of payment.
Furthermore, the Indonesian regulator has banned financial firms from facilitating crypto sales, i.e. they are not allowed to offer and facilitate sales of crypto assets. Instead, this can be done through registered global crypto brokerages such as Coinbase, Binance, Kraken or Gemini or approved domestic exchanges, among them Pintu, Indodax, Rekeningku, Triv, Luno and Binance-backed Tokocrypto.
Islamic scholars insists crypto it “haram”
One problem, however, is still unsolved. As a Muslim-majority country, a debate between Islamic organisations whether to rule crypto assets to be halal (permissible) or haram (forbidden) has resulted in classifying them as the latter due to elements of “uncertainty, wagering and harm” based on several considerations, including the prevalence of fraud.
Furthermore, Indonesia’s top Islamic scholarly body, the National Ulema Council, concluded that trading of crypto as a digital commodity does not meet other requirements of Islamic financial law because it lacks necessary elements such as having a physical form and intrinsic value, being proprietary and able to be handed over to the buyer.
