Indonesian Ministry of Finance through its Regulation No. 68/PMK.03/2022 dated March 30, 2022, governs the Value Added Tax and Income Tax on the Crypto Assets Trading Transaction (“PMK 68”). The PMK 68 which will be effective on 1 May 2022 has specific intention to cover the rapid development of Crypto Assets trading and transaction. The Government believes that the Crypto Assets as the trading commodity shall subject to Value Added Tax (VAT) and the income raising to the trading of Crypto Assets shall subject to Income Tax.
VAT
Under PMK 68, the VAT will apply to the following delivered items:
- The intangible Taxable Goods in the form of Crypto Assets by the Seller of Crypto Assets;
- The Taxable Services in the form of services of Electronics Infrastructure that is used for the Crypto Assets trading transaction, by the Electronic System Trading Operator; and/or
- The Taxable Services in the form Crypto Assets transaction verification services and/or mining pool of Crypto Assets management services by Crypto Assets Miner.
VAT on the intangible Taxable Goods in the form of Crypto Assets by the Seller of Crypto Assets
The Crypto Assets delivery by the Seller of Crypto Assets in Custom Territory and/or to the Buyer of Crypto Assets in the Custom Territory through the Electronic System Trading Operator includes:
- The sale and purchase of Crypto Assets by fiat money;
- The swap of Crypto Assets with another Crypto Assets;
- The swap of Crypto Assets with other goods and/or services other than Crypto Assets.
The VAT shall be collected, reported and submitted by the Electronic System Trading Operator. Under the PMK 68, the Electronic System Trading Operator shall become the VAT Registered Entrepreneur. As the VAT Registered Entrepreneur, the Electronic System Trading Operator needs to (i) submit the collected VAT as pursuant to the tax payment slip; and (ii) report the calculation and/or payment of the outstanding VAT in the VAT Periodic Tax Notification Letter.
The formula of the calculation of VAT:
- In the event that Electronic System Trading Operator is the Physical Trader of Crypto Assets:
1% x 11% x Crypto Assets Transaction
- In the event that Electronic System Trading Operator is not the Physical Trader of Crypto Assets:
2% x 11% x Crypto Assets Transaction
In the event that the value of the Crypto Assets Transaction is in other currency (not Indonesian Rupiah), the value transaction needs to be converted into Indonesian Rupiah currency based on the currency determined by the Ministry on the day of the VAT collection. Electronic System Trading Operator located or domiciled outside Custom Territory can be appointed as the VAT Registered Entrepreneur of the Electronic System Trading Operator.
VAT on the services of Electronics Infrastructure that is used for the Crypto Assets trading transaction, by the Electronic System Trading Operator
The services mentioned include:
- The sale and purchase of Crypto Assets using the fiat money;
- The swap of Crypto Assets with another Crypto Assets; and/or
- The e-wallet including deposits, withdrawal, transfer of Crypto Assets to other third-party account, and to supply and/or to manage the media of the Crypto Assets saving.
The VAT shall be collected, reported and submitted by the Electronic System Trading Operator. The calculation of the VAT is: VAT rate x Tax Base.
Tax Base in this context is amount of commission or payment in the form of name and or in any form, including commission or payment received by the Electronic System Trading Operator that will be forwarded to the Crypto Assets Miner.
VAT on Crypto Assets transaction verification services and/or mining pool of Crypto Assets management services by Crypto Assets Miner
The VAT will be collected by the Crypto Assets Miner as VAT Registered Entrepreneur. The calculation of VAT is: 10% of the VAT Rate x value in the form of money of the Crypto Assets being received by the Crypto Assets Miner through the system of block reward.
Income Tax
For all income received or earned by Crypto Assets Seller; Electronic System Trading Operator; or the Crypto Assets Miner with regards to the Crypto Assets, are subject to the Income Tax.
Income Tax on the income of Crypto Assets Sellers
Such income is considered as Income Tax object, including all income earned from all Crypto Assets transaction including transaction using fiat money, swap of Crypto Assets with another Crypto Assets, and/or other transactions of Crypto Assets, being conducted through the Electronic Infrastructure provided by the Electronic System Trading Operator. The earning is subject to Income Tax with Rate of 0.1% of the transaction value, excluding the VAT and Luxury Good Sales Tax. The Income Tax is final and will be collected submitted and reported by Electronic System Trading Operator. In the event that the Electronic System Trading Operator is not the Crypto Assets Physical Sellers, the rate being applied is 0.2% of the transaction value of Crypto Assets.
Exceptions for the above are as follows:
- The Electronic System Trading Operator that only provides the e-wallet services and only set as a portal for the Crypto Assets Sellers and Crypto Assets Buyer meet and /or does not facilitate the transaction of the Crypto Assets trading, does not have the obligation to collect the Income Tax.
In the event that the Electronic System Trading Operator is exempted from the obligation to collect the Income Tax, the Income Tax is final and shall be paid directly by the Seller of the Crypto Assets. The income tax needs to be paid at the latest on date of 15 of the following month after the tax period in accordance with the tax applicable laws.
- The Crypto Assets Seller that is the taxpayer outside Indonesia that has tax resident in the jurisdiction having an applicable tax treaty with Indonesia which waive the right to tax of Indonesian authority.
In the event that the Electronic System Trading Operator located or domiciled outside Custom Territory it may be appointed as the VAT Registered Entrepreneur, the Electronic System Trading Operator and the Income Tax collector.
Income Tax on the income of Electronic System Trading Operator
The earning of the Electronic System Trading Operator includes the services payment being accepted or obtained by Electronic System Trading Operator in form of the services of Electronic Infrastructure provider used for Crypto Assets transaction, fund withdrawal services, and depository services, transfer of Crypto Assets between e-wallet services, provider and/or management of media of the Crypto Assets saving or e-wallet services, and/or other related services delivery(ies) relating to the Crypto Assets. The rate being applied to this income is based on the general rate under the Income Tax Laws.
Income Tax on the income of Crypto Assets Miner with regards to the Crypto Assets
The revenue of Crypto Assets Miner includes the services payment being accepted or obtained by Crypto Assets Miner and all income from the Crypto Assets system in form of block reward, verification transaction fee or other earning from the Crypto Assets system and/or other earnings. The earning is subject to Income Tax with the rate at 0.1% of the transaction value, excluding the VAT and Luxury Good Sales Tax. The Income Tax is final and will be collected submitted and reported by Crypto Assets Miner.
For further information, please contact:
MetaLAW, Legal Consultant, Jakarta, Indonesia
general@metalaw.id
