Indonesian digital asset traders will have to pay new taxes on their transactions starting this May, a tax official has revealed, even as the trading volume in the country soared to $60 billion in 2021.
Directorate General of Taxes official Hestu Yoga Saksama announced the new taxes in a media briefing recently. The taxman will impose a value-added tax (VAT) on digital asset transactions and an income tax on capital gains from such investments at 0.1% each from May 1, he said.
As Saksama elaborated, the country’s laws recognize digital assets like commodities and not currencies, and as such, they are subject to VAT tax.
“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,” Saksama told media outlets.
He further claimed that the government is working on regulations to back these taxes.
Indonesia has become one of Asia’s biggest digital asset markets in recent years. According to the country’s Ministry of Trade, digital currency transactions shot up to 859 trillion rupiahs ($59.83 billion) in 2021, up from 60 trillion rupiahs ($4.1 billion) in 2020.
As Vice Minister of Trade Jerry Sambuaga observed, digital currencies have become even more popular than traditional stocks. In 2021, the number of Indonesians with Central Securities Depository accounts, with which investors trade shares, was 7.35 million. In contrast, there were 11 million Indonesians who owned digital assets last year, 4% of the total population.
Indonesia, which is Southeast Asia’s largest economy, categorizes digital currencies as commodities and has prohibited the public from making payments in Bitcoin, in line with several other countries that believe permitting digital currency payments would threaten the national sovereign currency.
Just recently, Thailand, the second-largest economy in Southeast Asia after Indonesia, announced a ban on digital currency payments.
“As the current payment system in Thailand is already highly efficient, the use of digital assets to pay for goods and services would not add much benefit to consumers and businesses,” three Thai regulators said in a joint statement in January.
In Indonesia, the country’s financial watchdog has also prohibited financial institutions from “using, marketing, and/or facilitating crypto asset trading.” In addition, influential religious organizations have declared Bitcoin haram.
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