- Cryptocurrency trading in Indonesia will be subject to 0.1% VAT and a transaction income tax, starting next month
- The move is in line with the nation’s tax reforms last year following its economic recovery from the COVID-19 pandemic
Indonesia will begin taxing crypto transactions via VAT and income tax next month in a move that could earn the government additional revenue from domestic business.
According to a Reuters report on Friday, the archipelago, which is made up of more than 17,000 islands, will begin charging 0.1% on both value added tax and income tax by May 1.
“Cryptocurrencies will be subject to VAT because they are an asset as defined by the Ministry of Commerce,” tax official Hestu Yoga Saksama said at a news conference last week. “I’m not a currency … so we’re going to impose income tax and VAT.”
VAT is a form of taxation applied to goods and services at every stage of the supply chain or of the sale to final consumers. Indonesia’s rate of 0.1% is significantly less than the 11% charged for other products. In comparison, Australia applies a 10% rate while the United States has a state-level sales tax ranging from 0% to 11.5%.
The move follows the country’s sweeping tax reforms last year, amid the nation’s economic recovery from the COVID-19 pandemic, which included provisions to tax profits on cryptocurrency trading business.
The Indonesian government is still working on implementing these regulations, Saksama said quoted in the report.
Like other Asian nations within the region, including Thailand and Vietnam, cryptocurrencies for use in payments are prohibited although Indonesians are allowed to trade them as commodities.
Indonesia is the largest economy in Southeast Asia, according to data from the World Bank. The nation is also the fourth largest in the world with a population exceeding 273 million people across 300 ethnic groups.
Of this, it is estimated that over 2.6% or 7.2 million people currently own some form of cryptocurrency, data from payment service provider Triple A shows.
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