Indonesia to impose VAT, income tax on crypto assets from May

[JAKARTA] Indonesia plans to charge value-added tax (VAT) on crypto asset transactions and an income tax on capital gains from such investments at 0.1 per cent each, starting from May 1, a tax official said on Friday, amid a boom in digital asset trading.

Interest in digital assets has surged in Southeast Asia's largest economy during the Covid-19 pandemic, with the number of crypto asset holders jumping to 11 million by the end of 2021.

Last year's total crypto asset transactions in commodity futures markets reached US$59.8 billion, up more than 10 times from 2020's transaction value, data from the Commodity Futures Trading Regulatory Agency showed.

Indonesians are allowed to trade crypto assets as a commodity but not to use them as a means of payment.

"Crypto assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency," the official, Hestu Yoga Saksama, told a media briefing. "So we will impose income tax and VAT." The government is still working on the implementing regulation for the taxes, he added.

The VAT rate on crypto assets is well below the 11 per cent levied on most Indonesian goods and services, while the income tax on capital gains, at 0.1 per cent of gross transaction value, matches that on shares.

Officials said a wide-ranging tax law passed last year was the legal basis for taxes on crypto assets. That law aimed to optimise revenue collection hit by the aftermath of the Covid-19 pandemic. REUTERS