Indonesia plans to charge VAT on crypto-assets

crypto-assets Indonesia VAT
Representations of cryptocurrency Bitcoin are seen in this picture illustration taken June 7, 2021. REUTERS/Edgar Su/Illustration

JAKARTA (Reuters) – 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% 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 859.4 trillion rupiah ($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 implementing regulation for the taxes, he added.

The VAT rate on crypto-assets is well below the 11% levied on most Indonesian goods and services, while the income tax on capital gains, at 0.1% 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.

($1=14,367 rupiah)

(Reporting by Stefanno Sulaiman; Editing by Gayatri Suroyo and Clarence Fernandez)

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