Indonesia Mulls Crypto Taxation Adjustment Amid Revenue Decline

Indonesia Mulls Crypto Taxation Adjustment Amid Revenue Decline

Indonesia’s Commodity Futures Trading Supervisory Agency (Bappebti) is considering revising its cryptocurrency taxation policy as tax revenues from crypto transactions saw a significant decline in 2023. The agency has urged the Ministry of Finance, led by Sri Mulyani, to reassess the current tax regime.

The crypto tax revenue in 2023 plummeted by 62% compared to the previous year, totaling $31.7 million (Indonesian Rupiah 467.27 billion). This decline was attributed to a substantial 51% decrease in crypto transaction volumes during the same period.

Introduced in May 2022, Indonesia’s crypto tax regime imposed dual taxation on crypto transactions, comprising a 0.1% income tax and a 0.11% value-added tax (VAT). Local exchanges were also subjected to contributing approximately 0.04% to the national crypto bourse.

Tirta Karma Senjaya, Head of CoFTRA’s Market Development and Development Bureau, emphasized the necessity of evaluating the tax scheme, given the evolving status of cryptocurrencies in the financial sector. The transfer of supervision from CoFTRA to the Financial Services Authority (OJK) warrants a review by the Directorate General of Taxes.

At the 10th anniversary of the Indodax event in Jakarta, stakeholders stressed the importance of periodic tax reviews, especially considering the nascent stage of crypto regulations. Tirta highlighted that tax evaluations typically occur annually to adapt to industry changes.

In January, Suryo Utomo, Director General of Taxes at Indonesia’s Ministry of Finance, reported a total collection of IDR 71.7 billion from crypto and fintech services businesses. Crypto tax accounted for IDR 39.13 billion, while fintech taxes amounted to IDR 32.59 billion.

However, concerns have arisen among local exchanges regarding the high tax rates, which they perceive as hindering revenue growth. Suggestions have been made to subject crypto transactions solely to income tax to foster market stability and growth.

The prevalence of illegal crypto exchanges poses another challenge to Indonesia’s tax system and regulatory efforts. Last year, the Blockchain Association of Indonesia uncovered 303 illicit crypto exchanges operating within the country, threatening regulatory integrity and revenue collection.

To combat this issue, the Bali province banned the use of cryptocurrencies as payment methods for foreign tourists, aiming to reinforce the official currency, the rupiah, as the sole legal tender. Trisno Nugroho, head of Bank Indonesia’s Bali Representative Office, reiterated that while crypto trading is permissible, using cryptocurrencies for payments is prohibited.

The prohibition on crypto payments for tourists in Bali aligns with broader efforts to regulate and oversee cryptocurrency utilization nationwide.

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