The latest legislation was enacted in response to measures introduced in October to increase government income. From the 1st of May, 2022, taxation will be imposed on the trading of cryptocurrency in Indonesia. Capital gains on cryptocurrency investments will be taxed at 0.1%.
Crypto Tax In Indonesia
On the 1st of April 2022, a tax official from Indonesia declared that the state would begin imposing a value-added tax on cryptocurrency trading transactions. Also, an income tax of 0.1% will be charged on capital appreciation on cryptocurrency investments. This legislation will take effect from the 1st of May.
In Indonesia, where digital currencies are treated as commodities, over 11 million cryptocurrency investors are active in the crypto industry. As stated by the Commodity Futures Trading Commission (CFTC), the volume of cryptocurrency transactions in 2021 increased by over $59.8 billion, a 1000% increase compared to trading volume in 2020.
A tax official, Hestu Saksama, told reporters at a news conference that since digital currencies are regarded as commodities in the state, it is acceptable that they can be taxed. Saksama said the authorities are still putting the tax regulation into effect. The value-added tax levied on cryptocurrency transactions is not the same as that charged for services and goods as it is lower. However, the levy of 0.1% is similar to that set on stocks.
Indonesia’s Crypto Revenue In 2021
The recent law on cryptocurrency is based on the legislation signed into law at the end of last year. In October, the Indonesian legislature passed a tax bill raising VAT, instituting a carbon charge, and repealing a corporation tax reduction, generating a revenue of approximately 139.2 trillion rupiahs after substantial spending in 2020 because of the COVID-19 lockdown.
At the start of 2022, the Financial Services Authority of Indonesia said that financial institutions are not authorized to offer digital currencies. “The Financial Services Authority has expressly forbidden financial institutions from engaging in, promoting, or facilitating digital currency trading,” the watchdog said in January 2022. Citizens cannot use digital currencies as means of payment since they are still not considered currencies in Indonesia. Digital assets may now be traded only on commodities exchanges, but the commerce ministry is currently working on establishing a separate marketplace to trade digital assets.
Bankman-Fried Is Pressing For The CFTC To Regulate Cryptocurrency Trading
Classifying digital currencies as commodities in Indonesia may guide the United States authorities as several agencies battle over who will manage the digital asset class. Sam Bankman-Fried, Chief executive officer of FTX, just advocated for cryptocurrency regulation at a posh party in Washington. At the party, he stated that the CFTC must have a larger role in regulating digital currencies and has urged the US Congress to expand the CFTC’s powers in that regard. “The Exchanges have concluded that they do not want to be controlled by the Securities Exchange Commission”, Georgetown law professor Patrick McCarty said.
