Indonesian Crypto Traders' Tax Contributions Drop by 63% in 2023
Date: 2024-01-25 Author: Dima Zakharov Categories: IN WORLD
Tax Revenues Plunge
The Ministry of Finance in Indonesia has reported a sharp decline in tax revenues collected from cryptocurrency traders in 2023. The total tax revenue plummeted by 63%, reaching 467.2 billion Indonesian rupiahs ($31.7 million). This decline is quite striking, considering the cryptocurrency taxation regime was only implemented in May 2022.
Double Taxation Dilemma
One major reason behind this decline in tax contributions could be the double taxation applied to cryptocurrency transactions in Indonesia. Traders are required to pay a 0.1% profit tax and a 0.11% value-added tax (VAT). Additionally, local cryptocurrency exchanges are also subject to a 0.04% tax when operating with the national crypto exchange.
Appeals for Tax Relief
Local cryptocurrency trading platforms have appealed to the government, requesting a reduction in tax rates. They have proposed that cryptocurrency transactions should only be subject to income tax, rather than VAT, in an effort to alleviate the burden of high taxation on traders. Currently, there are 303 illegal exchanges operating in the country, which raises concerns about the effectiveness of the existing tax system.
Regulatory Changes Ahead
Indonesia's Financial Services Authority (OJK) is gearing up to regulate the cryptocurrency industry from January 2025. The amendments in the country's legislation suggest that cryptocurrencies will be classified as securities rather than commodities. This move is expected to have significant implications for the cryptocurrency market in Indonesia.
Similar challenges regarding cryptocurrency taxation are being faced in India, where industry leaders remain skeptical about the government's plans to abolish cryptocurrency transaction taxes in the near future, hindering the industry's growth.
