Indonesia considers plan to tax trade in cryptos


FILE PHOTO: Representations of virtual currency Bitcoin are placed on U.S. Dollar banknotes in this illustration taken May 26, 2020. REUTERS/Dado Ruvic

JAKARTA: Indonesia is considering a plan to tax the trading of cryptocurrencies after a surge in popularity among local investors, a tax official said yesterday.

The South-East Asian country has been seeking to shore up state revenues amid the coronavirus pandemic, though Neilmaldrin Noor, a spokesman at Indonesia’s tax office, said a tax scheme for cryptocurrency was still at the discussion stage.

“It is important to know that... if there is a profit or capital gain generated from a transaction, the profit is an object of income tax, ” Neilmaldrin said.

“So the taxpayer who receives capital gain has to pay the tax and report it, ” he said.

South-East Asia’s biggest economy bans the use of cryptocurrencies as a payment instrument, but allows it to be traded as a commodity.

Indodax, a crypto exchange platform that claim to be the largest in Indonesia, said by April the number of active members on its platform hit three million as the price of bitcoin and other crypto assets reached record highs.

The number of members at Indodax rose from around 2.3 million at the start of the year.

Cryptocurrencies have been rallying in recent weeks with some smaller ones like Dogecoin up more than 700% in the last month.

Indonesia’s Financial Services Authority has warned investors against the risk of investing in cryptocurrency, arguing it does not have underlying value and prices are highly volatile.

The blockchain and crypto asset industry has grown exponentially in Indonesia over the past five years. The estimation of traders in Indonesia had reached a significant number, over 1.5 million traders, in 2020.

Indonesia is a pacesetter in the region for the Internet economy with growth rates in excess of 40% a year, reaching US$40bil (RM164bil) in 2019 and poised to grow to US$130bil (RM535bil) in 2025. ─ Reuters

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