JAKARTA, RAKYAT NEWS – Indonesia’s cryptocurrency industry continues to grow, but the implementation of crypto taxes remains a challenge, according to Oscar Darmawan, CEO of Indodax, one of the country’s leading crypto exchanges.

Despite regulations being in place since 2022, issues such as foreign transaction taxes and Value-Added Tax (VAT) persist, creating hurdles for traders and investors.

Crypto was first recognized as a tradable commodity in Indonesia in 2017, following a regulation by the Ministry of Trade. From 2017 to 2022, crypto income was subject to self-reporting, where traders declared their earnings in tax returns and paid progressive income tax. However, in 2022, the government introduced a final tax scheme, imposing a 0.1% income tax and a 0.11% VAT on crypto transactions conducted through licensed exchanges.

Indonesia’s crypto tax rates are among the lowest globally, making the country an attractive destination for crypto investors. In contrast, countries like the United States and those in Europe impose progressive taxes on crypto profits, with rates reaching up to 40-50%. Meanwhile, regions like Dubai and parts of the Middle East offer tax-free environments for crypto transactions.

While the final tax scheme simplifies the process, it has its drawbacks. Traders are taxed regardless of whether they make a profit or incur losses, unlike capital gains tax systems in other countries that only tax profits. Additionally, traders using foreign exchanges face difficulties in reporting and paying taxes, as there is no clear mechanism for taxing transactions on unlicensed platforms.

The regulation stipulates that transactions on foreign or unlicensed exchanges are subject to a 0.2% income tax, double the rate for licensed platforms. However, enforcement remains inconsistent, with traders often left to self-report their taxes. This lack of clarity has led to varying interpretations across tax offices, further complicating compliance.

YouTube player