Indonesia Updates Crypto Tax Framework

Indonesia is set to implement revised tax regulations on cryptocurrency transactions, effective August 1st. These changes aim to align the country's crypto taxation with its categorization of cryptocurrencies as financial assets rather than commodities. Here's a breakdown of the key changes:

Key Changes:

• Increased Transaction Tax: Sellers on domestic exchanges will face a higher tax rate of 0.21% on transaction value, up from 0.1%. For sellers using overseas exchanges, the tax jumps significantly from 0.2% to 1%.
• VAT Removal for Buyers: Good news for crypto buyers! The value-added tax (VAT) previously applied to crypto purchases (0.11-0.22%) has been eliminated.
• Higher Mining Tax: The VAT rate on crypto mining activities is also increasing to 2.2%, from 1.1%.
• Income Tax on Mining: The previous special income tax rate of 0.1% on crypto mining is being removed. Income from mining will now be subject to standard personal income tax or corporate tax rates, effective in 2026.

Key Takeaways:

• Higher Taxes for Sellers: If you sell crypto in Indonesia, especially through overseas exchanges, expect to pay more in taxes.
• VAT Relief for Buyers: Purchasing crypto will be more affordable with the removal of VAT.
• Mining Tax Increase: Crypto miners should prepare for higher VAT and a shift to standard income tax rates.

Industry Response

Tokocrypto, a Binance-backed exchange, welcomed the changes, stating that they reflect Indonesia's current view of crypto. They have also proposed a grace period to allow companies to adapt to the new regulations.

Tokocrypto also called for stronger oversight of crypto transactions conducted through foreign platforms and fiscal incentives to encourage innovation, highlighting that the new crypto tax rate is higher than the capital gains tax on stock market investments.

It's crucial for crypto investors and businesses operating in Indonesia to understand and adapt to these new tax regulations to ensure compliance.