The citizens of Indonesia are feeling the pressure of the Federal government with cryptocurrency-related policies and regulations. In the latest attempt to contain the rapid spread of cryptocurrency trading in the country, the government has added the industry into taxonomy laws. The memo issued by the government officials hints at imposing VAT on crypto gains.
VAT stands for Value Added Tax, and the investors who can earn profits from cryptocurrency trading are required to pay a fixed ratio of their income to the government. However, surprisingly the VAT is quite decent in comparison to many other countries. Hestu Yoga Saksama, a government Tax administrator recently told the media that the VAT for crypto capital gains is currently set at 0.1%.
The sudden attack on cryptocurrency trading brought the necessity and need of cryptocurrency trading to its peak. Indonesia, which is often regarded as one of the biggest economic contributors to the South Asian peninsula, reached 11 million cryptocurrency traders by the end of 2021. The Indonesian Commodity and Futures Trading Regulatory Agency has issued statistics for the space in the region.
According to the CFTC statistics, futures trading in Indonesia has been valued at $59.8 billion in 2018 alone. Moving on, the socio-economic factors allowed the number to increase ten times in 2020. Thus far, the government of Indonesia has allowed citizens to possess and trade cryptocurrencies. However, businesses cannot use digital assets as a mode of payment.
Tax on Capital Gains from Crypto
While the VAT taxes seem quite moderate, the government has proceeded to add another form of tax on the capital gains generated from cryptocurrencies. According to the local media outlets of Indonesia, cryptocurrency traders are also liable to pay the government 11% of their cryptocurrency profits in lieu of sales taxes. It is worth noting that the share traders also abide by the same tax ratios.
The government spokesperson has told the media that taxes imposition is recorded, keeping in view the cryptocurrency regulatory framework. Last year, the Indonesian government introduced crypto legislative guidelines. The state officials also maintain that the tax collection has been imposed, keeping in view that the government can make up for the loss of national revenues that have been depleted due to the onslaught of the COVID pandemic.