Indonesia implements new crypto asset VAT rules

Indonesia has unveiled new VAT rules for crypto assets. Under Indonesian law, crypto assets are to be treated as commodities rather than currencies.  

From 1 May 2022, trade in crypto assets is subject to VAT. In addition, providing electronic services to facilitate the exchange of crypto assets, or functions such as crypto mining, are subject to VAT. 

The new regulations specify new tax obligations on income derived from crypto transactions. 

Note that the VAT rate is not calculated at the standard rate. Businesses that operate crypto asset services in Indonesia should seek professional VAT advice if they are unclear on their specific obligations. 

Crypto confusion worldwide

As cryptocurrencies such as Bitcoin and Ethereum gain more traction, regulators worldwide need to provide clear guidance. 

In India, for instance, crypto platforms expressed concern that there is too much ambiguity in the way these assets are taxed. Exchanges say that are confused about the precise status of crypto assets and who is liable for tax, and under what specific  conditions. 

Even the relatively more simple process of exchanging goods for crypto assets raises questions. In the UK, HMRC’s initial guidance is that VAT is due as normal on such exchanges. (According to HMRC, VAT on such transactions within the UK must be calculated in GBP.)

At the same time, however, authorities stress the advice is provisional and is subject to change. 

Stay ahead of developing VAT regulations 

Regardless of whether crypto transactions ever become economically significant, it is clear technology has changed the regulatory landscape. 

Many regulators have already developed frameworks for digital services VAT. And authorities continually update tax regulations to keep up with the pace of e-commerce.

As the world’s VAT compliance and recovery specialists, VAT IT’s expert team provides the VAT advice and compliance technology your business needs to stay ahead of complex VAT regulations.