Indonesia Mulls Tax on Crypto Trading

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In Brief
  • Indonesian government considers taxing crypto trades.

  • Cryptocurrency still banned in the country to make purchases.

  • Tax season spotlights concerns and regulations in the crypto space.

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The Trust Project is an international consortium of news organizations building standards of transparency.

Indonesia is considering creating a plan to tax crypto trading. Tax officials in the country have stated that Indonesia is in the midst of a boom in the popularity of digital currency trading.

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Despite the surge, crypto trading is not new to the Southeast Asian nation. In 2019 Indonesia ranked third in the world for cryptocurrency ownership. Although the country no longer holds that position, these recent legislative considerations show crypto as a popular avenue among Indonesian investors.  

The official tax scheme is still in the discussion stages. Neilmaldrin Noor, a representative from the Indonesian tax office told Reuters, “It is important to know that… if there is a profit or capital gain generated from a transaction, the profit is an object of income tax.”

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While not set in stone, the proposed tax on crypto trading would amount to a final tax of 0.05%. This is lower than the 0.1% currently imposed on stock investors on the Indonesia Stock Exchange (IDX), according to CNBC Indonesia.

Crypto still banned 

As the crypto bull market stretches across the globe, the hurdles investors and developers face vary from place to place. 

Despite the ongoing boom in crypto prices and ever-increasing use cases for cryptocurrencies, Indonesia continues to ban the use of cryptocurrencies as a form of payment for transactions. Investors within the country can only interact with digital currencies as a traded commodity. 

Tax season concerns

Indonesia is not the only country scrambling to slap taxes and regulations onto crypto holders. 

South Korea intends to roll out a capital gains tax on crypto in 2022. The tax proposition did see a number of petitions and opposition towards the impending taxation scheme. However, polls now show a majority are in support of the tax. The tax imposes a 20% capital gains tax on crypto transactions greater than 50 million won. 

In the U.S., the Internal Revenue Service (IRS) recently refined the rules on cryptocurrency taxation. The new information clarifies questions on what taxpayers must claim in terms of digital assets. As non-fungible tokens (NFT) continue to increase in popularity, those involved in the buying and selling will also have to navigate tax implications on their holdings. 

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Savannah Fortis is a multimedia journalist covering stories at the intersection culture, international relations, and technology. Through her travels she was introduced to the crypto-community back in 2017 and has been interacting with the space since.

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