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Indonesia, known for its rapid embrace of cryptocurrencies, witnessed a substantial 60% decline in exchange transaction volumes throughout 2023, starkly contrasting to the previous year. Analysts suggest imposing high taxes might be a key factor driving traders away from the crypto market.
Heavy Taxation Dampens Crypto Enthusiasm
Indonesia classifies crypto assets as commodities, subjecting them to income tax and value-added tax (VAT). Prominent crypto exchanges in the country assert that the cumulative taxes on each transaction often surpass the trading fees levied by exchanges.
This taxation burden, comprising a 0.1% income tax and a 0.11% VAT on every crypto transaction, raises concerns among industry players. Oscar Darmawan, the CEO of the crypto exchange INDODAX, reveals that exchanges additionally bear a 0.04% fee to the recently established national crypto bourse.
Changes in Oversight and Classification
Some voices within the local crypto industry advocate for a shift in the classification of crypto from commodities to securities, asserting that this alteration would alleviate the tax burden on users.
According to Coin Desk, this change is already in the cards, as crypto oversight in Indonesia is set to transition from the country's commodities regulator to the Financial Services Authority (OJK) in January 2025. This shows that crypto adoption is growing in mainstream society.
According to Crypto News, leading exchanges such as Reku, Tokocrypto, and INDODAX concur that the removal of the VAT tax could be a possibility once oversight shifts to the OJK and crypto is potentially classified as securities. However, until this regulatory transition occurs, the fate of local exchanges in coping with further declines in transaction volume remains uncertain.
As Indonesia navigates the evolving landscape of crypto regulations, the industry watches closely, hoping for a future where taxation does not deter crypto enthusiasts.
Photo by: DrawKit Illustrations/Unsplash
