Regulation Update
Indonesia Officially Imposes Tax on Crypto Asset Per 1 May 2022

MUC Tax Research Institute | Friday, 08 April 2022

Indonesia Officially Imposes Tax on Crypto Asset Per 1 May 2022
Indonesia menetapkan aset kripto sebagai objek PPN dan keuntungan dari transaksi perdagangannya dikenakan PPh Final. (Photo: Worldspectrum/Pexels)

The Indonesian government has officially designated crypto assets as objects of Value Added Tax (VAT) and profits from digital asset trading transactions are subject to Income Tax.

Taxation will begin as of 1 May 2022, targeting individuals and companies who are sellers, buyers, miners, physical traders, Operators of Trade Through Electronic Systems (PPMSE), as well as providers of verification services and/or management services that facilitate mining and also buying and selling transactions of crypto assets.

A physical trader is a party that has received approval from the Commodity Futures Trading Regulatory Agency (CoFTRA) to conduct crypto-asset transactions, either on behalf of themselves, the seller, or the buyer.

Read: Rate Rises, Minister of Finance Releases List of 11 Transactions of Value Added Tax Object

The policy is contained in the Minister of Finance Regulation (PMK) Number 68/PMK.03/2022 on Value Added Tax and Income Tax on Crypto Asset Trading Transactions, which are the implementing regulations of the Law on the Harmonization of Tax Regulations (HPP law).

  VAT Final Income Tax (Article 22)
Tax Object
  • Trading crypto assets
  • PPMSE service
  • Mining (verification/management) services
  • Income from trading
  • Income from PPMSE services
  • Income from mining services
Rate Income From Crypto asset trading:
  • 0.11% (PMSE registered with CoFTRA)
  • 0.22% (PMS not registered with CoFTRA)
PPMSE services: general rates
Mining services: 1.1% of conversion value

Income From Crypto asset trading:

  • 0,1% (PMSE registered with CoFTRA)
  • 0,2% (PPMSE not registered with CoFTRA)

Income from PPMSE services: general rate
Income on mining services: 0.1% of income

Transaction Types
  • Trading crypto assets with fiat currency
  • Exchanges between crypto-assets and other crypto assets
  • Exchanges between crypto-assets with other goods and/or services
  • Trading crypto assets with fiat currency
  • Exchanges between crypto-assets and other crypto assets
  • Exchanges between crypto-assets with other goods and/or services

VAT Terms & Conditions

The government delegates VAT collection to PPMSE which facilitates crypto transactions, both domiciled in the country and abroad. The collection of VAT on crypto-asset transactions through PPMSE does not see the seller's VAT-Registered Persons status.

The PPMSE criteria that can be appointed as VAT collectors at least serve buying and selling transactions and exchanging crypto assets using an electronic wallet (e-wallet) payment system.

PPMSE's e-wallet services include deposits, withdrawals, transfer of crypto assets between accounts, as well as provision and management of crypto-asset storage media.

Regarding the collection of VAT, PPMSE is required to produce proof of VAT collection in the form of a document that is equated with a unification withholding /collecting slip.

Furthermore, PPMSE is required to pay the VAT that has been collected using a tax payment slip or other equivalent administrative means, not more than the 15th day of the following month after the collection Tax Period ends.

In addition, PPMSE is also required to report VAT that has been collected and deposited using a Notification of Periodic VAT Return (1107 PUT) no later than 20 days after the end of the tax period.

Minister of Finance Sri Mulyani Indrawati in the policy explained the reason for the government to tax crypto assets because the digital asset transactions have developed widely in the community and become commodities traded on futures exchanges.

Therefore, in accordance with statutory regulations in the field of trade, the transfer of crypto assets is included in the VAT object category and income from trading is considered an economic addition that should be subject to Income Tax Article 22.

"To provide legal certainty, simplicity, and ease of administration of collection, payment, and tax reporting on crypto-asset trading, (the government) needs to regulate provisions regarding value added tax and income tax," she wrote in PMK Number 68/PMK.03/2022.

Singapore and India also plan to impose a tax on trading in virtual digital assets or Non-Fungible Tokens (NFT) following the United States and Australia which have already implemented the policy.

PMK No. 68/PMK.03/2022 tentang Pajak Pertambahan Nilai dan Pajak Penghasilan atas Transaksi Perdagangan Aset Kripto

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