July 25, 2024

Indonesia’s Crypto Tax Revenue Plummets 62% in 2023 Amid Declining Transaction Volumes

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In a turn of events, Indonesia has experienced a substantial 62% decline in its cryptocurrency tax revenue for 2023, despite the notable surge in Bitcoin’s value. The total tax revenue generated from crypto transactions during the year amounted to $31.7 million (Indonesian Rupiah 467.27 billion), with the decline primarily attributed to a significant 51% decrease in crypto transaction volumes.

The Indonesian government had introduced a dual taxation system on crypto transactions in May 2022, imposing a 0.1% income tax and a 0.11% value-added tax (VAT). Additionally, local exchanges contributed approximately 0.04% to the national crypto bourse. However, the decline in transaction volumes has impacted overall tax collections.

The Commodity Futures Trading Supervisory Agency (Bappebti) has called on the Ministry of Finance, led by Sri Mulyani, to evaluate the implementation of crypto taxes. Tirta Karma Senjaya, Head of CoFTRA’s Market Development and Development Bureau, highlighted the need for periodic tax reviews, especially considering the evolving status of cryptocurrencies as significant players in the financial sector.

At the 10th anniversary of the Indodax event in Jakarta, stakeholders emphasized the importance of reevaluating the tax regime, acknowledging the nascent stage of crypto regulations. Tirta emphasized that periodic tax assessments are customary and expressed confidence in the crypto industry’s potential contribution to state revenue.

In January, Suryo Utomo, the Director General of Taxes at Indonesia’s Ministry of Finance, reported a total collection of IDR 71.7 billion from crypto tax and fintech services businesses. The breakdown included IDR 39.13 billion ($2,492,047.15) from crypto tax and IDR 32.59 billion ($2,075,538.37) from fintech taxes.

Throughout 2023, the cumulative state revenue from crypto and fintech taxes reached IDR 1.11 trillion ($70,691,856.27). However, local exchanges have expressed concerns about the high tax rates impacting revenues and have suggested subjecting crypto transactions solely to income tax to stimulate growth and stability in the Indonesian cryptocurrency market.

Digital Assets Desk

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