In 2025, Indonesia will undergo a significant regulatory shift in crypto-asset supervision, transferring oversight from the Ministry of Trade's Commodity Futures Trading Regulatory Agency (CoFTRA) to the Financial Services Authority (OJK). But does this change signal a shift in taxation as well?
Curently, crypto taxation in Indonesia is based on its classification as a commodity. What if this changes and crypto-assets are redefined as financial services? Such a reclassification would subject them to a more rigorous regulatory framework, potentially leading to changes in taxation.
Current Crypto Taxation in Indonesia
At present, Indonesian crypto users benefit from a relatively low tax rate of 0.1% – 0.22% on trading and mining activities. The applicable taxes include Value Added Tax (VAT) and final income tax. A "final" income tax means the tax obligation is settled at the transaction level and is not included in the overall annual income, simplifying tax reporting. This low-tax regime suggests the government's intention to support the growing crypto industry.
How Crypto Taxation Evolved
Indonesia's crypto taxation framework did not emerge overnight. It was introduced four years after crypto-assets were first designated as commodities—and notably, this classification was not made by a financial or fiscal authority but by CoFTRA.
The first attempt to define crypto-assets was made in 2018 when CoFTRA classified them as "commodities that can be traded in futures contracts" (Ministry of Trade Regulation No. 99/2018). The Ministry of Finance later incorporated this classification into the existing tax framework. The turning point came with the Taxation Harmonization Law, which led to the issuance of Minister of Finance Regulation PMK-68 in March 2022.
This regulation, which became fully enforceable two months later, introduced specific crypto taxes and empowered local crypto exchanges to act as tax withholders.
This precedent suggests that tax laws do not automatically change when new regulatory frameworks are introduced; instead, there is typically a delay before tax adjustments are made.
Crypto Before Regulation (2018–2022)
Between 2018 and 2022, crypto transactions in Indonesia existed in a regulatory gray area. Since there were no specific tax regulations for crypto, these transactions technically fell under general tax principles:
- Income Tax: Any economic gain that increases wealth is considered taxable income. Individual tax rates ranged from 5% to 35%, while corporations faced a 22% tax rate. These taxes were not final, meaning crypto income had to be consolidated with other sources of income.
- Value Added Tax (VAT): At 11%, this rate was 100 times higher than the later crypto-specific VAT rate.
This legal ambiguity likely created confusion among taxpayers, potentially leading to underreporting or complete non-compliance in crypto tax filings.
Surprisingly, the introduction of a lower, clearer crypto tax regime in 2022 did not improve tax compliance. Instead, Indonesia saw a 63% drop in crypto tax revenues just one year after PMK-68 was implemented—despite a surge in transaction volume and Bitcoin's 159% price increase.
Industry experts suggest several possible explanations:
1. Lack of Enforcement: The government may not be effectively cracking down on foreign and unregistered exchanges, leading users to shift their activity away from taxable platforms.
2. Distorted Perception of Taxation: Many crypto users did not pay taxes at all during the "void" era. The introduction of PMK-68 may have given the impression that crypto was newly taxed, rather than formally regulated, prompting users to seek ways to avoid taxation altogether.
3. Changes in Trading Behavior: Traders may be avoiding short-term transactions subject to tax and instead holding crypto as a long-term investment.
4. Perceived Complexity: Even at lower rates, crypto tax reporting might still be viewed as cumbersome, discouraging compliance.
The 2025 Shift: Financial Services Authority Steps In
In January 2025, the Financial Services Authority (OJK) issued its first crypto-specific regulation, aligning with international frameworks. It defines crypto-assets as "digital representations of value" with four key characteristics:
1. Backed by distributed ledger technology
2. Not issued by a central authority
3. Can be transacted electronically
4. Can take various forms (e.g., digital coins, tokens, backed/unbacked crypto-assets)
Crypto-assets are now classified as part of digital financial assets, with registration and supervision rules similar to those under CoFTRA. The new regulation strengthens oversight of crypto intermediaries, reinforcing market stability.
What’s Next for Crypto Taxation in Indonesia?
Looking at historical patterns, we can anticipate a lag between regulatory changes and tax law updates. If crypto is reclassified from a commodity to a financial asset, a fundamental reassessment of its tax treatment will likely follow.
Key Potential Changes Include:
- More differentiated taxation: Trading may continue to be taxed per transaction, while activities like staking, lending, and DeFi participation could fall under different tax regimes.
- VAT exemptions for financial services: Some crypto-related activities might become exempt from VAT, aligning with standard financial services taxation.
- Crackdown on foreign and unregistered exchanges: The OJK may tighten regulations on international exchanges and peer-to-peer trading, balancing industry growth with tax compliance.
Conclusion
Indonesia's evolving crypto regulations are bringing both opportunities and challenges. While the low-tax regime was designed to support the industry, declining tax revenues and compliance issues highlight the need for stronger enforcement and clearer policies. As the government redefines crypto-assets under financial law, a more structured tax framework is likely on the horizon. Whether this benefits the industry or stifles growth remains to be seen.
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