Indonesia is planning to impose value-added tax [VAT] on crypto-asset transactions and an income tax on capital gains from such investments at 0.1% each, beginning from May 1, according to a report published on 1st April.
In a press conference, Tax official Hestu Yoga Saksama explained that digital assets will be subjected to VAT and would be treated as a commodity, not a currency. “So we will impose income tax and VAT”, the official said. In terms of implementations, Saksama added that the government is still working on it.
Officials cited a wide-ranging tax law passed last year which provided the legal basis for taxes on crypto assets. That law aimed to optimize revenue collection which took a hit after the COVID-19 pandemic.
The report further mentions that 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. The news follows after its neighbor India had announced levying a 30% tax on revenue from the transfer of digital assets from April 1st.
As reported by TronWeekly, a few days ago, another neighbor Vietnam has also shown interest in the implementation of a legal framework surrounding digital assets. But there have been disappointments with regard to the stance adopted by several Asian countries like India, Malaysia, Thailand, etc which have opted for imposing heavy taxation and limiting their use for payments.
Indonesia’s burgeoning crypto holders
Indonesians too are falling in with their regional peers by allowing them to trade crypto assets as a commodity but not as a means of payment.
Nevertheless, it can’t be ignored that interest in digital assets has experienced notable growth in Southeast Asia’s largest economy during the COVID-19 pandemic, with the number of holders jumping to 11 million by the end of 2021.
As per data from Triple A, Indonesia has the seventh-largest crypto user base, below Brazil and Pakistan. It is estimated that there are 7.2 million Indonesians who own cryptocurrencies. Many attribute the rapid growth of crypto investors to Indonesian regulators welcoming crypto and blockchain developments with open arms.