VAT Policy Becomes 12%: How Much Impact Will It Have on the Crypto Market in Indonesia?

Bittime - The Ministry of Finance (Kemenkeu) announced that starting January 1 2025, the Value Added Tax (VAT) rate will increase from 11% to 12%. 

Minister of Finance Sri Mulyani explained that this change was in accordance with the Law on Harmonization of Tax Regulations (HPP) which was passed in 2021. However, the impact of this VAT increase on the crypto sector is still unclear.

Impact of VAT Increase on Crypto Tax

Until now, there has been no official statement from the regulator regarding whether the VAT increase will affect crypto taxes. 

However, based on Minister of Finance Regulation (PMK) No 68 of 2022, the VAT rate is one of the indicators in determining taxes for crypto asset transactions.

In the PMK, it is stated that the VAT payable for Physical Crypto Asset Traders (PFAK) is 1% of the transaction value, while for non-PFAK it is 2% of the VAT rate.

The VAT increase is considered to be in accordance with Law No. 7 of 2021

Referring to Law No. 7 of 2021, the current VAT rate is 11%, and will increase to 12% no later than January 1 2025. 

Sri Mulyani emphasized the importance of maintaining the health of the State Revenue and Expenditure Budget (APBN) through this policy, which also functions as a cushion during the global financial crisis.

Public Reaction and Potential Rejection of the 12% VAT Rate Increase

The planned VAT increase has sparked negative reactions on social media, with many netizens rejecting the policy. 

They argue that this increase will burden society, especially in the midst of sluggish economic conditions. 

Some social media users even called for living a frugal lifestyle in response to this policy.

Potential Delay of 12% VAT Increase

Chairman of the National Economic Council, Luhut Binsar Pandjaitan, stated that there is a possibility that the implementation of 12% VAT will be postponed. 

He emphasized the need to provide stimulus to affected communities before this policy is implemented.

Read too Crypto Tax in Indonesia: Based on Minister of Finance Ministerial Decree PMK 68/2022

Bhima Yudhistira's opinion on the impact of increasing VAT and crypto taxes

Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (CELIOS), revealed that the current implementation of crypto taxes is still too early and could reduce investor interest. 

An increase in VAT in the midst of a sluggish economy can trigger inflation

He believes that the increase in VAT which coincides with the crypto tax could worsen people's purchasing power and affect economic growth.

According to Bhima, "Increasing VAT in the midst of sluggish economic conditions can cause pre-emptive inflation, where the price of goods rises before the implementation of new tariffs. 

This will further burden society and reduce consumption, which is the main driver of economic growth." 

He also emphasized that if people's purchasing power decreases, the industrial sector will be depressed, and this could result in a decrease in turnover and potential layoffs.

Crypto Tax Increase Could Eliminate Investment Potential

Bhima added that the government needs to consider the long-term impact of this policy on the crypto sector and the economy as a whole. 

"If crypto taxes are implemented without considering market conditions, we risk losing potential investments that can support innovation and growth in the digital sector," he said.

Read too Cryptocurrency Tax Guide: How to Report Crypto Taxes in Indonesia

Conclusion

The increase in the VAT rate to 12% in January 2025 has the potential to have a significant impact on the crypto market in Indonesia. 

Although there is no certainty regarding the direct impact, this sector must be prepared for possible regulatory changes.

FAQ

What Percentage is Crypto Tax?

Tax for crypto asset transactions in Indonesia is currently 0.11% of the transaction value for each transaction carried out on a registered platform.

How Much Tax Should I Pay on Crypto?

If you make a crypto transaction, the tax you have to pay is 0.11% of the transaction value. In addition, for Income Tax (PPh), the applicable rate is 0.1% of the transaction value.

How to Buy Crypto on Bittime

Want to trade sell buy Bitcoins and crypto investment easily? Bittime is here to help! As an Indonesian crypto exchange officially registered with Bappebti, Bittime ensures every transaction is safe and fast.

Start with registration and identity verification, then make a minimum deposit of IDR 10,000. After that, you can immediately buy your favorite digital assets!

Check the exchange rate BTC to IDR, ETH to IDR, SOL to IDR and other crypto assets to find out today's crypto market trends in real-time on Bittime.

Also, visit the Bittime Blog for interesting updates and educational information about the crypto world. Find reliable articles about Web3, blockchain technology, and digital asset investment tips designed to enrich your crypto knowledge.

Reference

Adi Wiratno, VAT Increases to 12%, How Will This Impact the Crypto Space?, Accessed December 3, 2024

Septian Deny, The tug-of-war over plans to increase VAT to 12% in January 2025, pluses and minuses?, Accessed December 3, 2024

Author: IN