• Indonesia’s cryptocurrency exchanges will see a 60% drop in transaction volume by 2023 compared to the previous year.
  • Local exchanges attribute the decline in crypto to income and VAT taxes that are applied as the currency is treated as a commodity.
  • Local exchanges believe that reclassifying crypto as securities could reduce the tax burden on users and attract them back.

Indonesia, which is one of the fastest adopters in the world of crypto, has seen a drastic 60% drop in transaction volumes on exchanges compared to 2023. The industry believes that high taxes are one of the factors driving traders away.

In Indonesia, cryptoassets are taxed as commodities and subject to both income tax and value added tax (VAT). The leading crypto exchanges of Indonesia claim that the total tax paid for each transaction is greater than the trading fees charged by exchanges. The industry is concerned that traders may be discouraged from purchasing crypto due to the high taxes and fees.

Oscar Darmawan is the chief executive officer of INDODAX, a crypto exchange. He said that crypto users pay an income tax of 0,1% and a VAT of 0.11% on every crypto transaction. He added that exchanges must also pay a fee of 0.04% to the newly -established national crypto bourse.

In an interview, Darmawan said that the crypto industry in Indonesia is under a heavy financial burden.

Two-fold solution

Some crypto-industry professionals in Singapore believe that treating cryptocurrency as a security instead of a commodity would reduce the tax burden for users.

Both stocks and crypto have a profit potential and are therefore tradable. Implementing the same tax regime would be more consistent and equitable, Yudhono RAWIS, CEO of Tokocrypto, told CoinDesk Indonesia.

This change is expected. In January 2025, the Financial Services Authority will take over the crypto oversight in Indonesia.

Reku and INDODAX – all considered to be top exchanges in Indonesia – agree that the VAT tax can be removed when oversight is transferred to OJK, and crypto could potentially be classified as securities.

It’s not clear how the local exchanges can handle further volume drops.

Sandali Handagama is the editor.