Digital currency traders in Indonesia may soon have to start paying taxes. According to local reports, the country’s futures regulator is considering taxing all digital currency transactions on licensed exchanges. The proposal is currently undergoing review by other regulators.
Digital currency trading in Indonesia has soared over the past year. According to one industry expert, the Southeast Asian country recorded INR40 trillion (US$2.8 billion) in average monthly trading volume last year. Local exchanges have also recorded a surge in user signups.
With this in mind, the Indonesian government is seeking to ensure it doesn’t miss out on the billions of dollars in annual taxes it could derive from the sector. According to a report by the Phnom Penh Post, the Indonesian Commodity Futures Trade Regulatory Agency has proposed the new taxation. Better known as Bappebti, it has proposed imposing a final income tax on any transaction involving a digital currency. The tax will only apply to the 13 exchanges authorized by the market regulator.
Speaking to local media, Bappebti head Sidharta Utama said the proposal is currently sitting with the country’s fiscal policy agency, the Badan Kebijakan Fiskal (BKF). However, the BKF denied the report, claiming it had yet to receive any proposal from the futures regulator.
The Indonesian digital currency industry has welcomed the tax, as long as it’s not too high that it stifles investment. Teguh Kurniawan, the chairman of the Indonesian Crypto Asset Traders Association, revealed that his organization had proposed a 0.05 percent tax rate. This would be lower than the tax rate for shares’ transaction value which stands at 0.1 percent. However, the regulators have yet to give any feedback on this.
“To date, there has been no feedback on the type of tax. We hope the tax rate will not be too high, [or] we fear that investors may turn to investing in crypto through illegal channels, which would be harmful.”
Oscar Darmawan, the CEO of Indodax exchange, which is among the largest in Indonesia, welcomed the tax proposal. He expects that most investors will not mind paying the tax and that it would have very little effect on the trading patterns and volumes. Darmawan further revealed that Indodax had a great year in 2020, doubling its users to 3 million.
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