Cryptocurrency Transactions Will Be Subject To 11 Percent Value Added Tax

The government plans to impose a value added tax (VAT) on crypto asset transactions. (photo credit: pixabay)

JAKARTA - The government plans to impose a value-added tax (VAT) on crypto asset transactions and an income tax on capital gains from these investments by 0.1% each.

According to Hestu Yoga Saksama, Director of Tax Regulation I at the Ministry of Finance, the new tax provisions will begin on May 1.

The imposition of a tax on digital assets after the public interest that has surged during the COVID-19 pandemic. Even the number of crypto asset holders jumped to 11 million by the end of 2021.

According to data from the Commodity Futures Trading Regulatory Agency (Bapeti), last year's total crypto asset transactions in the commodity futures market reached 859.4 trillion rupiahs. This amount is said to have increased more than 10 times the transaction value in 2020,

Indonesians are indeed allowed to trade crypto assets as commodities or investments but cannot use them as a means of payment.

"Crypto assets will be subject to VAT because they are commodities as defined by the trade ministry. They are not currencies," the official, Hestu Yoga Saksama, told a press conference last Friday. "So we will impose income tax and VAT."

The VAT rate on crypto assets is well below the 11% imposed on most Indonesian goods and services. Meanwhile, the income tax on capital gains, amounting to 0.1% of the gross transaction value, is the same as the tax on shares.

Officials say a broad tax law passed last year is the legal basis for a tax on crypto assets. The law aims to optimize revenue collection affected by the COVID-19 pandemic.