The Indonesian government has disclosed a substantial decline in cryptocurrency tax revenue for 2023, amounting to $31.7 million (Indonesian Rupiah 467.27 billion), as reported by local news outlet Kontant.
This sharp 63% drop is in comparison to the partial collection period in 2022 when the country introduced its cryptocurrency tax regime. The tax reform, part of a broader initiative targeting the digital economy, aimed to enhance tax collection and establish a more equitable taxation system.
Despite Bitcoin’s notable surge of approximately 160% throughout the year, Indonesia witnessed a significant downturn in crypto tax revenue. The decrease was attributed to a 51% reduction in transaction volumes compared to the previous year.
Crypto transactions in Indonesia incur dual taxation, including a 0.1% income tax and a 0.11% value-added tax (VAT). Additionally, local crypto exchanges face a special tax of around 0.04%, payable to the national digital asset bourse.
Local exchanges, including INDODAX, have voiced dissatisfaction with the high tax rates, expressing concerns that these levies are prompting users to migrate to unregulated offshore exchanges. INDODAX and other platforms argue that the cumulative taxes on crypto transactions often exceed the trading fees paid by users, potentially driving them toward more cost-effective alternatives.
In the context of these challenges, Gibran Rakabuming Raka, a vice presidential candidate in the upcoming Indonesian election, has expressed a vision to accelerate Indonesia’s leadership in the digital revolution. He emphasized the country’s preparations to nurture expertise in blockchain, cybersecurity, and cryptocurrencies.
The decline in crypto tax revenue underscores the complex interplay between regulatory frameworks, taxation policies, and market dynamics in shaping the cryptocurrency landscape in Indonesia.
