Indonesia to introduce 0.1% cryptocurrency tax in May

The Indonesian government is reportedly planning to impose a 0.1 percent capital gains tax on cryptocurrency investments starting May 1, as well as a value-added tax (VAT) on digital asset transactions.

Indonesian tax agency spokesman Hestu Yoga Saksama said Indonesia would levy “income tax and value-added tax” on crypto assets “because they are commodities as defined by the Ministry of Trade” and “not currencies,” Reuters reported on Friday. The Indonesian government is reportedly still figuring out how to implement such a tax, but legislation passed in response to the pandemic lays the groundwork for a tax on cryptocurrency transactions.

The Indonesian Commodity Futures Trading Regulatory Agency (Bappebti) confirmed a report that in February 2022, cryptocurrency transactions in the country reached 83.8 trillion rupiah (about 5.8 billion U.S. dollars). Additionally, the number of cryptocurrency holders has increased by more than 11%, from 11.2 million in 2021 to 12.4 million.

Cointelegraph reported that Indonesian government officials have repeatedly considered taxing cryptocurrency transactions, despite warning citizens not to use digital assets for payments as early as 2014. Bappebti recognized more than 200 cryptocurrencies as legally tradable commodities in December 2020, and listed 13 exchanges as licensed crypto businesses in February 2021.

While the Indonesian government may be preparing to create a legal framework for cryptocurrencies, culture appears to be a factor affecting mainstream adoption. In November, the National Ulema Council, which is made up of Islamic scholars, said that cryptocurrencies are prohibited as a means of exchange under its religious laws. About 87% of Indonesia's population is Muslim. Although the committee's rulings can reportedly be a source of "legislative inspiration", they are not legally binding in Indonesia.

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