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Indonesia considers easing cryptocurrency taxation

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Indonesia’s Futures Trading Monitoring Agency (Bappebti) has asked the Ministry of Finance, led by Sri Mulyani, to reassess the taxation of cryptocurrencies.

Crypto Taxation in Indonesia

Indonesia saw a notable decline in crypto tax revenue in 2023, plunging 62% from the previous year, despite the rise in Bitcoin’s value.

Total tax revenue generated from crypto transactions in 2023 amounted to $31.7 million (467.27 billion Indonesian rupiah). This decline is primarily attributed to a significant 51% decrease in crypto trading volumes during the same period.

The tax regime, introduced by the government in May 2022, imposed double taxation on crypto transactions, including an income tax of 0.1% and a value added tax (VAT) of 0.11%, the exchanges local authorities contributing approximately 0.04% to the national cryptocurrency exchange.

According to a regional report, the Commodity Futures Trading Monitoring Agency (Bappebti) urged the Ministry of Finance, under the leadership of Sri Mulyani, to evaluate the implementation of crypto taxes.

Tirta Karma Senjaya, Head of Commodity Futures Trading Authority (CoFTRA) Market Development and Development Office, explained that this tax imposition corresponds to the classification of crypto as a commodity or asset. With the transfer of supervision of CoFTRA to the Financial Services Authority (OJK), the Ministry of Finance, particularly the Directorate General (Dirjen) of Taxes, is expected to evaluate these crypto tax schemes.

At the 10th anniversary of the Indodax event in Jakarta on February 27, stakeholders highlighted the importance of evaluating the tax regime, given the evolving status of crypto as an important player in the financial sector . Tirta stressed the need for periodic tax reviews, saying: “Usually, taxes are assessed every year. »

Tirta further expressed his belief that the crypto industry and its regulations are relatively new, ensuring room for growth until it can contribute substantially to state revenue through revenue collection. taxes.

In January, Suryo Utomo, Director General of Taxes at Indonesia’s Ministry of Finance, reported a total collection of IDR 71.7 billion from crypto tax and fintech service companies. He said IDR 39.13 billion ($2,492,047.15) came from the cryptocurrency tax, while fintech taxes amounted to IDR 32.59 billion ($2,075,538.37). .

Suryo also provided a detailed breakdown, stating that Rp. 18.25 billion ($1,162,276.02) came from Article 22 of the PPh, and the rest from Rp. 20.88 billion ($1,329,771.13). ) came from VAT on crypto transactions.

Over the previous year, state revenue from crypto and fintech taxes totaled IDR 1.11 trillion ($70,691,856.27), or Rp. 1,000,000.647.52 billion ($41,238,189.88) and Rp. 437.47 billion ($27,860,870.60) achieved by the end of 2023.

Local exchanges in Indonesia have expressed concerns over high tax rates, citing them as a factor in dwindling revenues as users explore alternative platforms.

Suggestions have been made to subject crypto transactions only to income tax, with the aim of fostering the growth and stability of the Indonesian cryptocurrency market.

Fighting illegal crypto exchanges

In May 2023, the Blockchain Association of Indonesia made a disturbing discovery: the presence of 303 illicit crypto exchanges operating in the country. This revelation poses a significant threat to Indonesia’s formal tax system, as it undermines efforts to effectively regulate and tax cryptocurrency transactions.

The proliferation of unauthorized trading not only jeopardizes the integrity of the tax system, but also raises concerns about possible revenue losses for the government.

These unregulated platforms provide users with the ability to conduct crypto transactions beyond regulatory oversight, complicating tax authorities’ efforts to accurately monitor and tax these activities.

Last year, the Indonesian province of Bali banned the use of cryptocurrencies as a means of payment for foreign tourists. The move is part of a broader initiative to strengthen the country’s official currency, the rupee, as the sole legal tender.

The Bali provincial government has issued warnings, stating that serious consequences such as expulsion, administrative sanctions, criminal charges, business closures and other strict sanctions will be imposed on foreign tourists who violate this ban.

Trisno Nugroho, head of the Bank Indonesia Representative Office in Bali, reiterated that while cryptocurrency trading is permitted in Indonesia, the use of cryptocurrencies as a means of payment is not permitted.

This ban on crypto payments for tourists in Bali is part of a broader strategy to supervise and manage the use of cryptocurrencies across the country.

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