Media: Indonesia’s tax policy has caused crypto exchanges’ trading volume to drop by 60% in a year

Cryptocurrencies in the country are classified as commodities and are subject to income tax and VAT

18.01.2024 - 12:10

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What’s new? Over 2023, the trading volume on Indonesian crypto exchanges has decreased by 60%, the industry representatives call the tax policy as the main reason. Thus, the country’s authorities consider crypto assets as commodities and impose income tax and VAT on them. As a result, the total amount of taxes from each transaction can exceed the trading fees of the platforms themselves.

CoinDesk’s material

What else is known? According to Oscar Darmawan, the CEO of the INDODAX crypto exchange, users pay 0,1% income tax and 0,11% VAT for each transaction. The trading platforms themselves also have to pay a 0,04% fee to the national crypto exchange launched last July. “This places a significant financial burden on the domestic crypto industry,” Darmawan noted in an interview with CoinDesk.

Some in the industry believe that recognizing cryptocurrencies as securities rather than commodities could alleviate the problem. According to Yudhono Rawis, the CEO of the Tokocrypto exchange, both stocks and cryptocurrency are tradable assets with profit potential, and implementing the same tax treatment for both investment instruments would be fairer and more consistent.

However, for now, exchanges are forced to operate in the previous mode. Only in January 2025, the supervision of the crypto sector will pass to the Financial Services Authority (OJK). According to representatives of leading exchanges, after that, VAT on crypto transactions may be abolished.

Indian traders also started moving to global exchanges en masse after the authorities imposed a 30% tax on cryptocurrency profits and started charging 1% for every crypto transaction. In addition, at the end of December last year, the local Fin Intelligence agency demanded that the websites of several leading global exchanges be blocked, and in January their apps disappeared from the App Store.

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