New Taxes on Crypto Asset Trading
In recent days, crypto assets have expanded widely. Almost every day new crypto assets are listed on various crypto trading platforms in Indonesia. Based on the data taken from the Ministry of Trade of the Republic of Indonesia, the number of transactions involving the use of cryptocurrencies such as Bitcoin has risen more than 14 times from Rp. 60 trillion to Rp. 859 trillion between 2020 and 2021. Although cryptocurrencies are banned as a payment method in Indonesia, investors are still allowed to trade crypto assets.
Based on this trend, the government has considered levying additional taxes on crypto transactions because crypto trading is categorized as other income and, therefore, is an object that is taxable under Article 4 paragraph (1) of Law Number 7 of 2021 concerning Tax Harmonization. Based on these considerations, the Ministry for Finance issued Regulation of the Minister for Finance No. 68/PMK.03/2022 regarding the Value Added Tax and Income Tax on Certain Crypto Asset Trading Transactions (“GR 68/2022”). GR 68/2022 has been in force since May 1, 2022.
GR 68/2022 regulates the imposition of Value Added Tax (“VAT”) on the delivery of crypto assets. This provision applies to the following transactions and conditions:
a. delivery of taxable goods in the form of crypto assets by the seller of crypto assets (selling and buying of crypto assets through the use of fiat currency, exchanging crypto-assets, and/or exchanging crypto assets for other goods or services);
b. provision of taxable services in the form of providing electronic facilities used in order to facilitate the trading of crypto assets by trade providers through the electronic system – PPSE; and/or
c. provision of taxable services in the form of crypto-asset transaction verification services and/or mining pool management services by crypto-asset miners.
The VAT rates for crypto transactions under GR 68/2022 are as follows:
- 1% of the VAT rate multiplied by the transaction value of physical trading of crypto assets; or
- 2% of the VAT rate multiplied by the transaction value of crypto assets where the crypto assets are not physically traded.
However, in point 1 above, only of physical trading of crypto assets that have obtained approval from authorized officials to conduct crypto asset transactions on their behalf and/or facilitate transactions of crypto asset sellers or crypto asset buyers are subject to VAT. Meanwhile, the amount of withholding tax rates for crypto transactions are as follows:
- Withholding tax is calculated at the rate of 0.1% of the transaction value of the crypto asset transaction;
- If the organiser of trading is not a physical trader, then the withholding tax rate is 0.2% of the transaction value.
In the event that the value of money paid by the buyer of a crypto asset is in the form of fiat currency other than Rupiah currency, the value shall be converted into Rupiah currency based on the exchange rate determined by the government on the date of receipt of payment. Furthermore, income tax on income from crypto asset transactions must be reported and deposited online by the organizer of the trading.
In a press conference on the State Revenue and Expenditure Budget – Anggaran Pendapatan dan Belanja Negara – APBN which was held on May 25, 2022, the Minister of Finance Sri Mulyani Indrawati explained that since GR 68/2022 in force on May 1, 2022, the government has started collecting taxes on crypto assets. The nominal amount that has been obtained is IDR 23.08 billion for income tax, and IDR 25.11 billion for VAT. The amount is expected to increase with more investors becoming more familiar with the crypto assets trading.
By : Nadindra Arina