Indonesia Contemplates Relaxing Taxation Policies for Cryptocurrencies
The Indonesian Commodity Futures Trading Supervisory Agency (Bappebti) has urged the Ministry of Finance, led by Sri Mulyani, to reevaluate the taxation of cryptocurrencies. Indonesia experienced a significant decline in its crypto tax revenue in 2023, dropping by 62% compared to the previous year, despite the rise in Bitcoin’s value. The total tax revenue generated from crypto transactions in 2023 was $31.7 million (IDR 467.27 billion), primarily due to a 51% decrease in transaction volumes. The government’s tax regime, implemented in May 2022, imposed a 0.1% income tax and a 0.11% value-added tax (VAT) on crypto transactions, with local exchanges contributing 0.04% to the national crypto market. The request for reassessment comes as the supervision of crypto shifts from the Commodity Futures Trading Authority (CoFTRA) to the Financial Services Authority (OJK). At the Indodax event in Jakarta, stakeholders emphasized the need to evaluate the tax regime, considering the evolving status of crypto in the financial sector. Tirta Karma Senjaya, Head of CoFTRA’s Market Development and Development Bureau, stressed the importance of periodic tax reviews and the potential for the crypto industry to contribute to state revenue. In January, the Director General of Taxes reported a total collection of IDR 71.7 billion from crypto tax and fintech services businesses. Suggestions have been made to subject crypto transactions solely to income tax to encourage growth and stability in the Indonesian crypto market. Additionally, the presence of 303 unregulated crypto exchanges in the country poses a threat to Indonesia’s formal tax system, as it hampers efforts to regulate and tax cryptocurrency transactions effectively. The unauthorized platforms allow users to conduct crypto transactions without regulatory oversight, making it difficult for tax authorities to monitor and tax these activities accurately. Furthermore, the Bali province has banned the use of cryptocurrencies as payment methods for foreign tourists as part of an initiative to reinforce the country’s official currency, the rupiah, as the sole legal tender. Violators of the ban may face severe consequences, including deportation, penalties, criminal charges, business closures, and other strict sanctions.
