The Impact of Taxes on Crypto Transactions
In 2023, Indonesia experienced a significant downturn in its cryptocurrency market, with transaction volumes on local exchanges plummeting by 60% compared to the previous year. This decline is attributed in part to the imposition of income and value-added taxes (VAT) on crypto transactions, as cryptocurrencies are classified as commodities in the country.
Taxation Woes: A Major Challenge for Traders
Cryptocurrency users in Indonesia are currently facing a dual tax burden. Each transaction incurs an income tax of 0.1% and a VAT of 0.11%. Oscar Darmawan, the CEO of INDODAX, one of Indonesia’s leading crypto exchanges, highlights the financial strain this places on the industry. Additionally, exchanges are required to pay a 0.04% fee to the national crypto bourse. This combination of taxes and fees is potentially driving traders away from the crypto market.
Proposed Solutions: Reclassification and Tax Reduction
To alleviate this burden, some industry leaders suggest reclassifying crypto assets as securities, which could reduce the tax load on users. Yudhono Rawis, CEO of Tokocrypto, argues for a more equitable tax regime, similar to that for stocks. This change may occur soon, as crypto oversight in Indonesia is set to transfer from the commodities regulator to the Financial Services Authority (OJK) in January 2025. Top exchanges like Reku, Tokocrypto, and INDODAX are hopeful that the VAT tax might be removed with this shift, potentially reclassifying crypto as securities.
However, the future remains uncertain for local exchanges as they navigate the current tax landscape and anticipate potential regulatory changes. The industry is waiting to see how these developments will affect the market’s recovery and growth.
