Indonesia plans to tax crypto from May – government to levy VAT and 0.1% tax on income from crypto trade

• Indonesia will levy a 0.1% tax on income from crypto trading and a 0.1% VAT as well.
• Indonesia’s tax slabs are lower than those levied by countries like India.
• Prices of Bitcoin registered a significant drop over the weekend, after the announcements.

The price of Bitcoin has seen a rather steep decline in Indonesia over the weekend as the country’s government announced plans to tax crypto income from next month.

Come May, the Indonesian government will start taxing capital gains income from crypto trading and investments at 0.1%, officials announced this past Friday. In addition, a value-added tax (VAT) of 0.1% will also be levied on crypto transactions, the government said. Reuters was the first to report about Indonesia’s plans to tax crypto last week.

Further, Indonesia’s director of tax regulations, the Ministry of Finance, told CNN that both the taxes would be levied from May 1, giving investors just about a month to decide how they plan to invest in the future.

Acknowledging crypto as a commodity?

The move may not come as the best news for crypto investors in India, but much like in other countries, it suggests that the government is starting to consider crypto as a commodity in Indonesia. This is similar to moves seen in India and some other countries. It is also lower than the 11% tax that the Indonesian government levies on other goods and services in the country.

In fact, Indonesia’s tax is also lower than the slabs decided in neighbouring India as well. On February 1, Finance Minister Nirmala Sitharaman announced the government’s plan to tax income from crypto trading and investments at 30% and will not allow losses from one token to be offset with another.

The country also plans to levy a 1% tax deduction at source (TDS) on crypto transactions, under which buyers will have to deduct the tax amount from a seller when buying cryptocurrencies.

This, according to many experts, could further hurt the crypto ecosystem in India. On April 1, Bitcoin.com reported a significant drop in trading volumes in India following the announcements. Crypto exchange CoinSwitch’s founder Ashish Singhal had also said that the lack of tax offset could impact the industry adversely.

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