According to Indonesia’s Ministry of Finance, the country received $31.7 million (or Rupiah 467.27 billion) in taxes from cryptocurrency in 2023.
When the tax regime was instituted in May 2022, the nation’s tax revenue decreased by 62% from the partial collecting period to the previous year.
Two taxes apply to cryptocurrency transactions in Indonesia: 0.11% value-added tax (VAT) and 0.1% income tax. Furthermore, local cryptocurrency exchanges have to pay the national cryptocurrency exchange a tax of about 0.04%.
However, in 2023, the value of bitcoin (BTC) increased by 159%. In contrast to the notable upswing in the market, Indonesia’s crypto tax revenue declined in 2023, coinciding with a 51% decline in the nation’s crypto transaction volumes in 2022.
It’s important to note that local exchanges have objected to the high tax rates and held them responsible for declining income as customers looked for other options. Local exchanges in Indonesia suggested that the sole tax applied to cryptocurrency transactions should be income tax rather than VAT. The proposal from the exchanges comes as the Financial Services Authority (OJK) of the nation is ready to regulate cryptocurrencies starting in January 2025. According to them, this change would categorise cryptocurrencies as securities rather than commodities.
Prominent Indonesian exchange INDODAX brought attention to the fact last month that the nation’s overall taxes on cryptocurrency transactions frequently surpass trading commissions. This creates concerns that customers may move to illegitimate or foreign exchanges in search of lower transaction costs.
In a related development, the official tax system in Indonesia is seriously threatened by the 303 illicit exchanges that the Blockchain Association of Indonesia said were operating in the nation in May 2023.