Indonesia to Raise Crypto Transaction Taxes While U.S. Looks to Cut Them

Indonesia’s crypto space is currently undergoing a significant shift as the government is introducing revised tax regulations effective August 1. The new tax regime imposes a 0.21% levy on domestic crypto trades and a 1% tax on international exchange transactions. The updated framework seeks to tap into the burgeoning crypto sector’s growing revenue potential, driven by its explosive user growth of over 20 million.

Indonesia Levies 0.21% Crypto Tax

According to a recent Reuters report, the Indonesian government has decided to increase the domestic crypto trades tax to 0.21%, up from the previous 0.1%. The biggest impact falls on overseas exchanges, where traders will face a significant tax hike – from 0.2% to 1%.

However, buyers will benefit from the removal of Value-Added Tax (VAT), previously ranging from 0.11% to 0.22%. Crypto mining has also been impacted, with the VAT on mining activities doubling. However, miners will benefit from the abolition of the 0.1% special income tax; from 2026, they’ll be taxed under standard income tax brackets.

Tokocrypto, backed by Binance, welcomes Indonesia’s new crypto regulations, viewing them as a positive step towards recognizing digital assets as financial instruments. However, they suggest a transition period of at least a month to help businesses adapt to the changes. The platform stated,

We also emphasize the importance of strengthening oversight and tax enforcement on crypto asset transactions conducted through foreign platforms.

This development comes on the heels of India’s recent decision to hold its crypto tax unchanged at 30%. As CoinGape reported, the Indian Finance Ministry has also announced that the country doesn’t plan to approve Bitcoin ETFs in the near future.

Why This Tax Hike

Indonesia’s crypto market saw explosive growth in 2024, with total transaction value tripling to over $39.67 billion (650 trillion rupiah) compared to the previous year. The country now boasts more than 20 million crypto traders, surpassing the number of stock market investors.

Significantly, the Indonesian government’s tax overhaul aims to standardize the market, generate revenue, and encourage traders to use domestic exchanges. By offering lower tax rates on domestic exchanges compared to overseas platforms, the government aims to incentivize transactions locally, thereby boosting liquidity.

In addition, the government plans to strengthen regulatory oversight, securing a steady revenue stream from the sector’s rapid growth. This move aligns with Indonesia’s efforts to formalize its crypto market, having classified digital assets as commodities since 2019.

In contrast to Indonesia’s crypto tax policy, the US is heading towards a more favourable rule. As CoinGape reported, Donald Trump has proposed to eliminate capital gains taxes on US-based cryptocurrencies, a move that aims to boost their everyday use.