Indonesia's Crypto Tax Revenue Plummets by 63% in 2023 Amid Bitcoin Surge

• Crypto Tax Revenue in Indonesia Fell by 62% in 2023
• Dual Taxation on Crypto Transactions
• Bitcoin's Value and the Impact on Tax Revenue
• Local Exchanges Protest High Tax Rates
• Financial Services Authority Plans for Regulation
• Concerns Over High Tax Rates
• Growth of Illegal Exchanges

Crypto Tax Revenue in Indonesia Fell by 62% in 2023

According to the Ministry of Finance in Indonesia, 2023 witnessed a 62% fall in crypto tax revenue, which amounted to $31.7 million (Indonesian Rupiah 467.27 billion). This indicates a significant drop from the partial collection period in 2022, the year the tax regime was implemented in May.

Dual Taxation on Crypto Transactions

The current system induces dual taxation on crypto transactions, which consists of a 0.1% income tax and a 0.11% value-added tax (VAT). Furthermore, local crypto exchanges are required to contribute approximately 0.04% tax to the national crypto bourse.

Bitcoin's Value and the Impact on Tax Revenue

In 2023, Bitcoin$42,260 -0.64% (BTC) witnessed an impressive 159% rise in its value. Nevertheless, this did not reflect a positive impact on Indonesia's crypto tax revenue, which saw a downturn that mirrored a 51% decrease in the country's crypto transaction volumes during the same year, compared to 2022.

Local Exchanges Protest High Tax Rates

High tax rates have not been received favorably by local exchanges, which blame these rates for their thinner revenues as users begin to look for alternatives. They have proposed that crypto transactions should only be subject to income tax, with the VAT being eliminated.

Financial Services Authority Plans for Regulation

This suggestion is made amidst the Financial Services Authority's (OJK) plans to start regulating crypto from January 2025. Local exchanges believe that this change could potentially categorize crypto more as a security than a commodity.

Concerns Over High Tax Rates

Last month, INDODAX, a major Indonesian exchange, raised concerns that the total taxes on crypto transactions often surpass trading fees in the country. This has led to fears about users migrating to overseas or illegal exchanges to conduct cheaper transactions.

Growth of Illegal Exchanges

In May 2023, the Blockchain Association of Indonesia reported the presence of 303 illegal exchanges operating within the country. This is seen as a significant threat to the formal tax system.

Edited by Jonathan Stoker