Indonesia's Commodity Futures Trading Supervisory Authority (Bapebuti) has asked the Ministry of Finance, led by Sri Mulyani, to review virtual currency taxation.
Indonesia’s virtual currency taxation
In Indonesia, crypto tax revenue in 2023 saw a notable drop, falling 62% year-on-year, despite the soaring value of Bitcoin.
The total tax revenue from virtual currency transactions in 2023 reached $31.7 million (Indonesian Rupiah 467.27 billion). This decline is primarily due to a significant 51% decline in cryptocurrency trading volume over the same period.
The tax system introduced by the government in May 2022 imposes double taxation on virtual currency transactions, including 0.1% income tax and 0.11% value added tax (VAT), and domestic exchanges are We will contribute approximately 0.04% to
According to a regional report, the Commodity Futures Trading Supervisory Authority (Bapebuti), under the leadership of Sri Mulyani, has asked the Ministry of Finance to evaluate the introduction of a virtual currency tax.
Tirtha Karma Senjaya, Director of Market Development and Development, CoFTRA (Commodity Futures Trading Authority), explained that this tax is consistent with the classification of virtual currencies as a commodity or asset. With the transfer of supervision from CoFTRA to the Financial Services Authority (OJK), the Ministry of Finance, especially the Directorate General of Taxation (Dilgen), is expected to evaluate these crypto tax systems.
At the IndoDax 10th Anniversary event held in Jakarta on February 27, stakeholders highlighted the importance of assessing tax regimes in view of the evolving status of cryptocurrencies as key players in the financial sector did. “Typically, taxes are assessed annually,” Tirta said, stressing the need for regular tax audits.
Tirta further expressed the belief that the cryptocurrency industry and its regulation is relatively new and has room to grow until it can substantially contribute to state revenues through taxation.
In January, Indonesia's Ministry of Finance Tax Director-General Suryo Utomo reported that total collections from virtual currency taxes and fintech services business amounted to Rp71.7 billion. He said Rp 39.13 billion ($2,492,047.15) comes from virtual currency taxes, while fintech taxes amount to Rp 32.59 billion ($2,075,538.37).
Mr. Suryo also provided a detailed breakdown and said that Rp. 18.25 billion ($1,162,276.02) will be derived from Article 22 of the PPh, and the remaining amount will be Rp.5 billion. 20.88 billion ($1,329,771.13) comes from value-added tax on virtual currency transactions.
Throughout the previous year, state revenues from virtual currency taxes and fintech taxes totaled Rp 1.11 trillion ($70,691,850,627). 647.52 billion ($41,238,189.88) and Rp. 437.47 billion ($27,860,870.60) realized by the end of 2023.
Indonesia's local exchanges have expressed concerns about high tax rates as a factor in reducing revenue as users seek alternative platforms.
A proposal has been put forward to impose only income tax on virtual currency transactions, with the aim of promoting the growth and stability of Indonesia's virtual currency market.
Tackling illegal virtual currency exchanges
In May 2023, the Indonesian Blockchain Association made the troubling discovery that there were 303 illegal cryptocurrency exchanges in the country. This revelation poses a significant threat to Indonesia's formal tax system, as it undermines efforts to effectively regulate and tax virtual currency transactions.
The proliferation of unauthorized exchanges not only jeopardizes the integrity of the tax system, but also raises concerns about potential revenue losses for governments.
These unregulated platforms provide users with a means to conduct cryptocurrency transactions beyond regulatory oversight, complicating tax authorities' efforts to accurately monitor and tax these activities.
Last year, the Indonesian island of Bali banned the use of cryptocurrencies as a payment method for foreign tourists. The move is part of a larger effort to strengthen the country's official currency, the rupiah, as the only legal tender.
The Bali provincial government issued a warning, saying that foreign tourists who violate the ban will be subject to strict measures, including deportation, administrative penalties, criminal charges, business closures and other severe sanctions.
Trisno Nugroho, head of Bank Indonesia's representative office in Bali, reiterated that while crypto transactions are allowed in Indonesia, using cryptocurrencies as a means of payment is not.
The ban on cryptocurrency payments for tourists in Bali is part of a broader strategy to oversee and control the use of cryptocurrencies across the country.
