Indonesia mulls crypto tax policy review
Indonesia's cryptocurrency regulatory body is urging the government to reconsider its tax policies concerning digital assets.
Officials from Indonesia’s Commodity Futures Trading Supervisory Agency (Bappebti) argued last week that the imposition of double taxation on crypto transactions warrants a reevaluation. That’s according to a report which appeared in local news source, Bisnis Indonesia, a Jakarta-based daily newspaper. Currently, cryptocurrencies in Indonesia are classified as commodities, subjecting them to a value-added tax (VAT) of 0.11% and an income tax of 0.1%.
Proposed changes in 2025
Tirta Karma Senjaya, the head of Bappebti, the Indonesian Commodities and Futures Trading Regulatory Authority, highlighted that the classification of cryptocurrencies as commodities might undergo changes in 2025. This potential shift is due to the planned transfer of crypto oversight from Bappebti to the Southeast Asian country’s financial services authority, OJK.
It had been speculated that the switch of oversight would potentially reclassify digital assets as securities. With that change would come a necessary adjustment to the applicable tax policy.
Tirta suggested that given that cryptocurrencies are expected to be integrated into the financial sector by January 2025, he urged the Tax Director General to reconsider these tax rates. The regulatory body head added that it’s been over a year since the implementation of these rules. With that, tax policies typically undergo annual reviews.
Accommodating crypto’s developmental state
Addressing an event in Jakarta, the regulatory body head emphasized the nascent stage of the crypto industry and its regulatory framework. Consequently, he advocated for providing the industry with leeway to mature until it becomes a substantial contributor to national revenue.
In response to Bappebti's call for a reassessment of crypto taxes, Dwi Astuti, a spokesperson for the Ministry of Finance, assured that the Ministry would consider input from both industry stakeholders and the public.
"We welcome input from Bappebti and the public. It will certainly be discussed internally," remarked Astuti during a media interaction last week.
2023 crypto tax take slump
The existing tax structure for cryptocurrencies has been in effect since April 2022, generating approximately $2.49 million in revenue in January 2024. In contrast, Indonesia recorded $41.2 million in crypto tax revenue in the previous year.
However in 2023, the country witnessed a decline of 63% in crypto tax revenue compared to the previous year, despite Bitcoin's remarkable surge of approximately 160% during that period.
Local crypto exchanges such as INDODAX had attributed the significant drop in trading volume throughout 2023 directly to hefty taxes, expressing concerns that it would drive users towards foreign exchanges.
Hasan Fawzi from the Ministry of Finance highlighted the trend of decreasing crypto asset transaction values in 2023. Nonetheless, he noted that the number of crypto asset customers continued to rise, reaching 18.06 million users throughout the year.
The crypto sector is seen as having a lot of potential in Indonesia. Last October data released by Bappebti suggested robust growth of the crypto investment landscape within the country. Over the space of a year, Indonesia had seen a 10.1% growth in the number of crypto investors. That data may not have been lost on the country’s politicians as in December, crypto featured as an election campaign issue.
