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Indonesia plans to charge value-added tax (VAT) on crypto asset transactions and an income tax on capital gains from such investments at 0.1% each.

Indonesia plans to charge value-added tax (VAT) on crypto asset transactions and an income tax on capital gains from such investments at 0.1% each, starting from May 1, a tax official said on Friday, amid a boom in digital asset trading.

Interest in digital assets has 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 2021.

Last year's total crypto asset transactions in commodity futures markets reached 859.4 trillion rupiah ($59.8 billion), up more than 10 times from 2020's transaction value, data from the Commodity Futures Trading Regulatory Agency showed.

Indonesians are allowed to trade crypto assets as a commodity but not to use them as a means of payment.

"Crypto assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency," the official, Hestu Yoga Saksama, told a media briefing. "So we will impose income tax and VAT."

Source: https://www.coinshots.com/news/indonesia-to-impose-vat-income-tax-on-crypto-assets-from-may

As I understand it, this is not a legislation specific to cryptocurrencies, but rather because of the nature of the classification of these currencies as “commodity” and therefore a value-added tax was imposed on all commodities?
So nothing new happened, and the tax is not too expensive and you can avoid it if you keep hodling bitcoins and don't sell them.

This decision of the Ministry of Commerce of Indonesia is caused by the fact that they do not want to recognize cryptocurrency as a digital kind of money. It is possible that it is advantageous for them to consider cryptocurrency as a commodity, since in this case they can get additional income by charging value-added tax.

that's right! they classified it under commodity, hence, imposing this VAT. and that is why they can't use it as payment method because they are not distinguishing this as digital currency that can be alternative for payment method. in the near future, they may change its classification once they start accepting crypto as payment method.
and yes, unlike other countries that are imposing tax on crypto, their percentage is quite low. which is good for their small crypto users. the country is not very rich so it won't help if they will charge high tax to its small users.

You can't tax every crypto trader and holders. How do you tax people trading defi on decentralized exchanges and selling on P2P using escrow. It will really be difficult. Currently, my bank doesn't know the source of my credit, it's not tied to commodity. Censoring crypto is very complex.

why don't they recognize bitcoin as a currency only but choose to only put it in the commodity category, this is so funny imo.  i don't follow developments about the Indonesian economy, but what i hear is that it's a developing country, they should follow in the footsteps of El Salvador, making bitcoin a legal tender so that their economy can improve.

What nonsense, this is why free trade cannot exist in many countries of the world because they want to make a global asset some benefit to their national fiscal budget and that is not how a free trade beneficiary scenario works out.   You cannot honestly tax currencies and even commodities should not be dealt with in that way unless you are purely dealing with your own countrymen such as petrol usage relates to pollution perhaps.
    Aviation fuel is excluded from taxes by order of the Geneva convention for example because to do so would restrict international travel and the freedom of those people, sadly other usable global items are not protected in this way but it will be to Indonesia's loss imo.

The basis was last year's passed tax law which was aimed  at raising more funds for economic recovery. This allows the Government to imposed VAT and Income Tax on capital gains for trading commodities BTC and other crypto has been recognized as a commodity since 2019.

Yes the VAT rate is below most goods or services taxed at 11% but the income tax on capital gains is the same with final tax on shares listed on Indonesian stock exchange.

Implementing rules and regulations are still being drafted but you can already assume that they will focus on licensed and regulated crypto exchanges in Indonesia. They can try to expand on DEX and P2P trades after that.

Crypto cannot be a legal currency in Indonesia because the laws only allow Rupiah as our legal currency. So, there is nothing to do with the policy made by our ministry of commerce. Please, check again the laws related to legal currency in Indonesia. Even, dollars cannot be a legal currency in Indonesia.

About the advantage to allow it as a digital commodity, it is true that the government is possible to earn taxes from this decision. But the tax object must make sense, it shouldn't intervene in any crypto exchanges in Indonesia. Trading activity in an exchange cannot be taxed, it is the own business of the exchange. The tax may be possible when the crypto holder wants to withdraw their asset to the banks.

For now they can’t, and they will focus more on centralized platform to know every single person who are into cryprocurrency and that’s where taxation begins. Sooner or later they will require everyone to report crypto profits, this could be more good than to ban cryptocurrency at all, we will deal with this soon.

Good luck with their government if they could do that since in the first place they don't want crypto to be used a means of payment. There are many ways to avoid being in the list of centralization so I wonder how did their government plan all of this making exceptions and consideration.

The tax isn't that big and anyone who are holding won't get taxed. Once you remove yourself from being on the list of centralization especially crypto holders you are safe from taxation and also don't make it obvious if you want to trade with someone and there's no way on earth they would know someone is trading with x person.

People of Indonesia still have a choice to use other platform if they really don't want to pay the tax and they still have time to transfer their funds on any platform that is out of control of their government, decentralized one or a hard wallet is a safe place for them. I remember Indonesia banning cryptocurrency before, and now they will impose a tax on it instead, this is not a new scenario anymore and good luck to their government on collecting taxes, this can be one of the hardest thing to collect.

There are a lot of countries today who are not ready to recognize bitcoin as a currency, they would rather see it as a commodity that people can only buy and sell, and not a currency that would be used for transactions. Like you have said, when a government recognizes an asset as a commodity, investors of that asset would have to be paying income tax and VAT (value added taxes).

Anyways, we know that this isn’t much of a big deal, compared to what we have seen happening in India where the government is charging investors up to 30% tax. Such a huge amount of tax is likely to cripple the community in that particular country. But as usual, people would always get around this.

So lucky that you guys got off with just 0.1%.

In India, the govt has imposed a tax of 30% on EVERY crypto transaction done by an individual irrespective of the tax slab or financial level of the user. While it is seen by many to dissuade people from investing into the scams and ponzis being propagated in the name of cryptocurrencies, this will undoubtedly hurt the average enthusiast who are looking to make a career and income stream from it.

You also forgot about the value added tax, the rate of which in Indonesia was 10%. Although the amount of VAT may in some cases be taken in a larger or smaller value. But in any case, this is less than you have to pay in India and allows to legally work with crypto assets.

it's fine if the Indonesian government wants to do it, taxes are indeed the biggest income as an asset of the Indonesian state, As far as I know all crypto exchanges, official ones from their government are legally licensed to operate in Indonesia, registered.

Maybe the current government is aware that crypto users are growing very large in Indonesia, you can say billions of transactions per day, here may arise a thought for the government to carry out a 0.1% tax rule through VAT or PPH.

low taxes of just under 1% no one seems to have a problem with this. compared to countries in europe or even India which impose high taxes on crypto assets. I think the crypto community in Indonesia is lucky, they are not burdened with heavy regulations. if with this regulation crypto can be more accepted in Indonesia, I agree with this regulation.

Like it or not, for the sake of the sustainability of the market in Indonesia, in my opinion, collecting 0.1% is not too heavy. Because the money will go into the state treasury as a form of tax compliance with crypto assets. Stocks and other properties have also been taxed longer than before but there has been no problem so far. So we'll see if the application of the tax will be as effective as it should be.

30% theft is a theft, not a tax. They can expect people to start hiding their gains, trading abroad or for cash, or not dealing with crypto at all. There's a simple rule that taxes have to be adjusted so that they bring profit but also aren't a burden for people. 1% tax is not a burden at all but may not bring enough profit. 10% tax is usually fair enough to be convenient for the taxpayers but also high enough for the government to feel the difference in income. Anything above 20% starts being a burden and pushes more people towards evasion.

0.1% is great because since they are demanding taxes it means they recognize crypto profits as legal and aren't planning to ban them but also the tax is so low that it doesn't change anything for investors.

I wanted to write that 0.1% is such a low tax, and it truly in low, but if it's additional to VAT, then it's VAT that is worthy of discussion. VAT is usually for goods, and currencies aren't subjected to it, so it means that cryptos aren't treated as currencies in Indonesia. That being said, VAT is 10% in Indonesia, right? So, considering that VAT is often well above this, it's not a huge tax. But IMO a progressive tax would make more sense for cryptos, and something a little below 10% would be more encouraging. But 10% isn't terrible, and additional 0.1% don't make a big difference.

The Indonesian government has decided to impose income tax and value added tax on cryptocurrency because they have notice that the cryptocurrency community in Indonesia has continued to grow since the pandemic.

So, it shouldn’t come as a surprise, that was the case in most countries, we noticed increase in the number of investors in the cryptocurrency market during the pandemic which took place in 2020.

And in a case like this, when the government starts to notice that more and more people are getting involved in things like this, they would like to get involved in it, and one of the ways they are doing this is by adding tax.  I have also heard that the community are strongly against it, although I don’t think that 0.1% is much.

Compared to many other countries in the world where they take huge amounts of tax from investors and especially the cryptocurrency investors Indonesia is to take a huge amount of tax from people, however, I believe taking tax can be just an alternative solution for the government and people can easily bypass and runaways from the tax because of bitcoin basic none knows the real capital on unless they try to exchange the asset into a fiat currency which requires pass some KYC steps.

I myself am Indonesian and so far the government is still neutral for crypto Indonesia and there is no shade for special laws and crypto tax regulations as my handwriting in another post (http://bitcointalk.org/index.php?topic=5382938.msg59678462#msg59678462)
while the number of crypto asset investors in Indonesia has reached 12.4 million as of February 2022  (https://investasi.kontan.co.id/news/jumlah-investor-aset-kripto-di-indonesia-sudah-tembus-124-juta-per-februari-2022)and this is a very high development for the community towards crypto from the previous year.

How is it neutral when you already have the following?
- It's not recognized as a currency and therefore cannot be used as payment.
- It's allowed for trading and classified as a commodity
- It's taxable under VAT and Income Tax

Their stance is pretty clear to me even before the recent tax was announced.

Indeed, from KYC to convert to fiat, you can trace who and how much funds were withdrawn. therefore the government still has an object of increased tax per May, namely cryptocurrency. I think this is not a problem as long as clear regulations from the government are implemented. With the collection of this tax, it means that bitcoiners themselves certainly have the rights that are listed according to the government regulations.

In short, there are really ways or methods which could really make yourself able to hide with these taxation.Come to think that other government had already imposed some taxation on transactions made but still not able

to make it in full extent or effectivity yet users who had been dealing with crypto could able to avoid themselves on getting taxed without being detected which is the reason on why government do really hate up crypto
for this kind of particular feature which they cant really get rid off nor able to control.So its not really that a worrisome thing for Indian crypto users.

I think this is good for the future of cryptocurrencies in the country. They are implementing a tax on crypto-assets which means they are considering crypto as a legal commodity.  People from that country now at least use crypto under official jurisdiction. I am sure they will legalize crypto in the future officially. 0.1% is not actually discouraging like the 30% tax in India.

That could be a small tax to encourage everyone to declare their crypto profit, and once Indonesia have the details already of those who are into cryptocurrency, they will surely increase that rate so don’t be complacent for that. Although this is a good start of adoption in Indonesia, its just that people should consider everything if they want to pay taxes especially their security and their anonymity.

with this tax, Indonesian should worry or complaint, if compare with Indian Tax that reach 30% this is good step from Indonesian government to growth crypocurrency ecosystem. The President always support Indonesian citizen to earn money and take opportunity from crypto market in several occasion. by this tax, Indonesian investors and traders now have certainity with their money.

when the tax is applied automatically crypto is legal there .... and I hope that with the applicable tax rates Indonesia will also provide good service regarding the crypto transaction security system by providing special laws to minimize crypto fraud which is now ranked no. 2 in the world (https://bitcointalk.org/index.php?topic=5390374.0)

At least it is better than not being able to trade at all. Also better than what Indian Government are trying to tax their people of 30 percent. Aside from that, is there a punishment when they used it as a payment? How would they know if it was just for trading or a commodity only and not by means of payment of services? Maybe their exchanged are centralized and regulated but 59.9 billion dollars is a lot to track.