How do Association and Business Actors in the Crypto Asset Industry Response?
JAKARTA, Indonesia, June 6, 2022 /PRNewswire/ — The regulation regarding the taxation of crypto asset transactions is officially issued by the Government. Tax provisions on the crypto asset trading are regulated on the Minister of Finance Regulation No. 68 of 2022 (“PMK 68/2022”), where this regulation is a derivative for the Law on Harmonization of Tax Regulation (“UU HPP”). The regulation imposed a VAT rate of 1% from VAT rate multiplied by the value of the crypto asset transactions, while the regulation also imposed a (final) income tax for every earnings gained from crypto asset sales with 0,1% tax rate that applied from May 1, 2022.
However, the tax enforcement on crypto asset transactions set by the PMK 68/2022 is still debated, especially for business actors. Therefore the Indonesian Blockchain Association (Asosiasi Blockchain Indonesia/ABI) which represents all prospective crypto asset exchanges registered under CoFTRA gave a response regarding the implementation of crypto asset tax:
Crypto asset tax enforcement date seems too fast considering the prospective crypto asset exchanges need to prepare for the technical process of tax collection and then socialize it to the investors who will become the taxpayers.
The imposed tax rates should be more clarified because based on the Minister of Trade Regulation No. 99 of 2018 regarding the “General Policy for the Implementation of Crypto Asset Futures Trading”, stipulates crypto assets as commodities that can be subject to futures contract traded on the Futures Exchange (Article 1), while there is no clear regulatory basis for the VAT rates for futures commodity with classification of intangible asset such as crypto assets, where cannot be treated the same way with other futures commodities. As for the 2.5% income tax rate for futures commodities that has been imposed on Government Regulation No. 17 of 2009 regarding the Income Tax on Derivative Transactions Revenue in the Form of Futures Contracts Traded on the Exchange (“PP 17/2009”), which in principle must be taken into consideration in the tax imposition has been revoked by the Government Regulation No. 31 of 2011 (“PP 31/2011”), and until now there has been no revised and/or updated Government Regulation regarding the income tax rates specifically for the Futures Commodities.
On the other hand, the tax rate imposed can cut out the competitive value for the domestic business actors, so it is feared that it could cause potential domestic customers to turn away and transact using foreign crypto exchanges that are not supervised by the CoFTRA which will impact the domestic crypto asset industry (causing capital outflows), especially for the business actors that have been registered and comply with the CoFTRA regulation. Another thing that needs to be considered is the crypto asset ecosystem which is also being built by the Government, including Futures Exchange, Clearing Houses, and Depository which means there will be additional fees applied for the crypto asset exchanges and not the foreign crypto exchanges.
Asih Karnengsih as the Chairwoman of ABI said, “We appreciate and will support the Government in making and establishing tax regulations for crypto assets, meaning that the crypto asset industry is currently one of the things that Government pays attention to since it has great potential to contribute to the state revenue, but what concerns us right now is the legal basis for income tax & VAT rates that need to be strengthen while also pay more attention to maintaining the competitiveness of domestic business actors.“
Deputy Minister of Trade, Jerry Sambuaga – through a press release, Tuesday (29/3/2022) stated, “The last two years have been an interesting period for crypto asset trading developments in Indonesia. Until February 2022, the transaction value grew by 14.5 percent compared to the same period in 2021.” From this data, people can see the rapid development of crypto asset trading in Indonesia. It would be unfortunate if this development is hampered, or if there’s possibility of a decrease in the tax compliance level on crypto asset transactions as a result of tax imposition without an in-depth study. In order to encourage tax regulations that are more amenable to all stakeholders, ABI is also preparing an in-depth study for the Crypto Asset Tax.
SOURCE Asosiasi Blockchain Indonesia