Indonesia’s Crypto Boom Stumbles, Trading Volumes Plummet 60% Amid Tax Concernsby Fintech News Indonesia January 18, 2024
Indonesia’s cryptocurrency market, previously known for its rapid adoption rates, experienced a significant downturn last year, as trading volumes on local crypto exchanges plummeted by 60% compared to the previous year.
Industry experts suggest that stringent tax policies are partly to blame for this decline. In the Indonesian market, cryptocurrencies are categorised as commodities, making them subject to both income tax and value-added tax (VAT).
This dual taxation has led to a situation where the cumulative tax burden on crypto transactions often surpasses the trading fees charged by the exchanges themselves. This heavy taxation is considered a deterrent for traders and could be impacting their willingness to engage in crypto trading.
Oscar Darmawan, CEO of Indonesian crypto exchange INDODAX shared his thoughts on the matter in an interview with CoinDesk. According to Darmawan, crypto transactions are taxed with an income tax of 0.1% and a VAT of 0.11%.
Additionally, exchanges are obliged to pay a 0.04% fee to the country’s new national crypto bourse. Darmawan emphasised the significant financial strain these policies place on Indonesia’s domestic crypto industry.
The local crypto community is advocating for a shift in the treatment of cryptocurrencies from commodities to securities. This change, they argue, could alleviate some of the tax burdens faced by users.
A major regulatory shift is on the horizon, with crypto oversight in Indonesia set to move from the commodities regulator to the Financial Services Authority (OJK) in January 2025.
This transition is expected to bring about changes in how cryptocurrencies are classified, potentially leading to the elimination of VAT for crypto transactions.
Featured image credit: Edited from Freepik