Indonesian Crypto Exchanges Cite High Taxes for Trading Volume Drop

• Indonesian Crypto Trading Volume Suffers 60% Decline in 2023
• Crypto Taxation in Indonesia
• Details of Crypto Tax
• Proposed Solutions to Reduce Crypto Tax Burden
• Upcoming Changes in Crypto Oversight

Indonesian Crypto Trading Volume Suffers 60% Decline in 2023

In 2023, Indonesia witnessed a significant 60% downwards shift in the transaction volume on its crypto exchanges from the prior year. A potential driver of this decline, as perceived by the industry, are the high taxes imposed on cryptocurrency transactions in the country.

Crypto Taxation in Indonesia

In Indonesia, cryptocurrencies are classified as commodities, which makes them subject to both income tax and Value Added Tax (VAT). Some of the leading crypto exchanges in the nation argue that the total tax amount traders need to pay on each transaction often exceeds the trading fees charged by the exchanges. With the addition of trading fees, the overall financial burden may be discouraging traders from investing in cryptocurrencies.

Details of Crypto Tax

Oscar Darmawan, the Chief Executive Officer at INDODAX, one of the crypto exchanges in Indonesia, says that crypto users are currently required to pay 0.1% income tax and 0.11% VAT on each cryptocurrency transaction. On top of this, the exchanges must also pay a fee of 0.04% to the newly established national crypto bourse. This combined tax and fee structure puts a considerable financial strain on the local crypto industry, according to Darmawan.

Proposed Solutions to Reduce Crypto Tax Burden

Some actors in the local crypto industry propose recasting crypto as securities instead of commodities as a possible way to lessen the tax burden. Yudhono Rawis, CEO of exchange platform Tokocrypto, states that Both stocks and crypto are tradable assets with profit potential… Therefore, applying the same tax regime to both these investment instruments would lead to a more equitable and consistent approach.

Upcoming Changes in Crypto Oversight

Anticipated changes in the oversight of cryptocurrency are also expected to influence the crypto tax situation. As of January 2025, the supervision of crypto will move from Indonesia's commodities regulator to the Financial Services Authority (OJK). Major Indonesian exchanges, including Reku, Tokocrypto, and INDODAX, agree that the VAT tax could possibly be abolished once oversight transfers to the OJK and if cryptocurrencies are reclassified as securities. The future, however, remains uncertain as to how these local exchanges will manage potential further declines in trading volume.

Edited by Jonathan Stoker