Indonesia To Impose 0.1% Crypto Tax From May: Report

The Indonesian government is reportedly planning to levy a 0.1% capital gains tax on crypto investments starting May 1, as well as a VAT on digital asset transactions.

According to a Reuters report on Friday, Hestu Yoga Saksama, a spokesman for Indonesia’s tax agency, said the country will levy “income tax and VAT” on crypto assets “because they are a commodity as defined by the Ministry of Commerce” and “not currency.” The government is reportedly still considering how to introduce such taxes, but legislation passed in response to the pandemic has laid the groundwork for collecting revenue from cryptocurrency transactions.

Indonesia’s commodity futures regulator, also known as Bappebti, confirmed a report that crypto transactions in the country hit 83.8 trillion rupiah — about $5.8 billion — in February 2022. Additionally, the number of crypto holders increased by more than 11% from 11.2 million in 2021 to 12.4 million.

Cointelegraph reported that Indonesian government officials have considered imposing a tax on crypto transactions many times, despite warning their citizens against using digital assets for payments back in 2014. The Bappebti recognized more than 200 cryptocurrencies as commodities that could be legally traded in December 2020 and designated 13 exchanges as licensed crypto companies in February 2021.

Related: Indonesia’s Crypto Industry in 2021: A Kaleidoscope

While the Indonesian government may be preparing to create a legal framework for cryptocurrencies, culture appears to be a factor in mainstream adoption. In November, the National Ulema Council, a group of Islamic scholars — about 87% of Indonesia’s population identify as Muslim — declared that crypto as a transaction tool was banned under its religious laws. Although the Council’s decisions can reportedly be a source of “legislative inspiration”, they are not legally binding in Indonesia.