07 Apr 2022 Samantha McLauren
Indonesia Adds 0.1% Income Tax On Digital Asset Gains
Digital asset traders in Indonesia will have to pay new taxes on their transactions, according to Directorate General of Taxes official Hestu Yoga Saksama. The new taxes include a value-added tax (VAT) on digital asset transactions and an income tax on capital gains from such investments at 0.1% each from May 1.
Sakuma added that Indonesia’s laws consider digital assets as commodities, and being such, they are subject to taxes.
“Crypto assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency. So we will impose income tax and VAT,” Saksama noted.
The new regulations come amid Indonesia becoming one of Asia’s biggest digital asset trading hubs, as data from the country’s Ministry of Trade, digital currency transactions have skyrocketed to 859 trillion rupiahs ($59.83 billion) in 2021, from just 60 trillion rupiahs ($4.1 billion) in 2020.
Furthermore, Vice Minister of Trade Jerry Sambuaga noted that digital currencies have become even more popular than traditional stocks. Indeed, Indonesians with Central Securities Depository accounts, used to trade shares in Indonesia, were 7.35 million, while a total of 11 million Indonesians reportedly owned digital assets last year.
Indonesia’s moves are in a stark contrast to Thailand’s decision to ban digital currency payments.
“As the current payment system in Thailand is already highly efficient, the use of digital assets to pay for goods and services would not add many benefits to consumers and businesses,” Thai regulators said in a statement back in January.
Indian parliament member wants even higher crypto taxes
As Indonesia is preparing to impose a 0.1% trading tax on cryptos, Indian parliament member Sushil Kumar Modi stressed that crypto is like gambling and must be taxed at a very high rate, such as 50%.
“The government has not said in so many words … that crypto is like gambling. It is like the lottery, it is like a casino, it is like horse racing … and in all these things the tax rates are very high”, Modi explained.
Modi also suggested imposing a 28% goods and services tax (GST) on the entire crypto transaction value, instead of only applying 18% GST on the service provided by crypto exchanges, citing that the GST should be on the entire transaction value, just like gambling, horse racing, casino, lottery, and other sectors.
Speaking about whether or not the Indian government plans to adopt Bitcoin as a legal tender, Modi stressed that the government of India is not going to legalize (crypto) like El Salvador or Ukraine.
“We feel these cryptos are not good for the financial stability of any country … Only countries with unstable finances are legalizing these tenders,” Modi concluded.
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