No Longer Subject to VAT, Crypto Transactions Now Withheld Under Income Tax Article 22
Starting August 1, 2025, cryptocurrency transactions will no longer be subject to Value Added Tax (VAT). This is aligned with Minister of Finance Regulation (PMK) Number 50 of 2025, which classifies cryptocurrency as an object of Income Tax Article (ITA) 22.
As a result, cryptocurrency transactions will be subject to a final ITA 22 at a rate of 0.21% of the transaction value. The responsibility to withhold and collect this tax falls on electronic trading platform providers (PMSE) acting as domestic digital financial asset traders.
For PMSEs based overseas, they may collect the ITA 22 on crypto transactions only after being appointed by the Directorate General of Taxes (DGT) as a tax withholder.
To be eligible for appointment, foreign crypto-trading PMSEs must meet certain criteria, including having a specific transaction value with buyers in Indonesia or reaching a certain number of visitors or traffic within 12 months. These thresholds will be determined by the Minister of Finance.
The Income Tax Article 22 rate to be withheld by foreign crypto-trading PMSEs is higher, set at a final rate of 1% of the transaction value.
It is also important to note that not all PMSEs are required to withhold ITA Ar 22 on crypto transactions. Exempted entities include PMSEs that only provide e-wallet services, merely act as intermediaries between crypto buyers and sellers, or do not facilitate crypto transactions at all.
This change in tax treatment reflects the shift in the function of cryptocurrency, from being considered a commodity to now being classified as a financial instrument. As such, like money and securities, it is no longer subject to VAT.
Tax Base for Income Tax Article 22
Income Tax Article 22 on cryptocurrency trading is imposed based on the transaction value. The transaction value may be determined as follows:
a. The amount paid by the buyer, if the transaction is conducted using fiat currency (government-issued legal tender).
b. The value of each cryptocurrency asset, if the transaction is conducted through a swap.
c. The amount received by the seller for transactions not covered under points (a) and (b).
It is important to note that if the cryptocurrency transaction is paid using a fiat currency other than the Indonesian rupiah, it must first be converted into rupiah. The exchange rate used for conversion is determined by the Minister of Finance.
Similarly, for transactions conducted through a swap mechanism, the value of the crypto assets involved must also be converted into rupiah. The conversion can be based on the value set by the digital financial asset exchange, the value listed within the PMSE system, or the market selling price of the crypto asset before the Income Tax Article (ITA) 22 payment deadline.
Withholding and Payment of ITA 22 on Crypto
Every digital financial asset trading PMSE (Trade Through Electronic System) that acts as a withholding agent for Income Tax Article (ITA) 22 is required to prepare a tax withholding receipt or a unified tax collection receipt. Afterwards, the PMSE trading in digital assets must also make the payment to the Directorate General of Taxes (DGT).
Preparation of Tax Withholding Slip
The preparation of the tax withholding slip must be completed no later than the end of the month of the relevant tax period.
Alternatively, the digital financial asset trading PMSE may prepare another document that is treated as equivalent to a withholding receipt or unified ITA 22 tax collection receipt, provided that the document includes the following information:
a. Name, address, and Taxpayer Identification Number (TIN) of the PMSE provider
b. Name, address, and TIN or Population Identity Number (NIK) of the buyer, provided that both the seller and buyer of the crypto asset are domestic taxpayers or foreign taxpayers with permanent establishment status
c. Name, address, and NPWP of the party subject to withholding if both the seller and buyer of the crypto asset are foreign taxpayers
d. Unique transaction number related to the income subject to withholding, including the type, quantity, and name of the Crypto Asset transacted
e. Tax base
f. ITA 22 rate
g. Amount of ITA 22 withheld, and
h. Status of the unification Income Tax Article (ITA) withholding or tax withholding slip
Preparation of Tax Payment Slip
After conducting the withholding or collection, PMSE crypto traders are required to remit the final Income Tax Article (ITA) 22 to the Directorate General of Taxes (DGT). The remittance is made using a Tax Payment Slip (SSP) or another instrument deemed equivalent to a tax payment slip.
The Tax Payment Slip must be submitted through the filing of the Unification Periodic Income Tax Return (SPT Masa PPh Unifikasi).
VAT on Crypto Transaction Services
Under this regulation, although the transfer of crypto assets is no longer subject to VAT, the services related to such transactions remain subject to VAT. The types of taxable services subject to VAT include:
First, electronic facilities for crypto transactions are provided by PMSE. These services include:
- Crypto buying and selling activities using fiat currency
- Crypto-to-crypto swap transactions
- Electronic wallet services such as deposits, withdrawals, transfers (swaps) of crypto assets to third parties, as well as the provision or management of crypto storage media
Second, verification services for crypto asset transactions by crypto miners. This includes individuals or entities (mining pools) that perform crypto transaction verifications.
The VAT due on electronic service facilities is set at 12%, with the tax base determined as 11/12 of the compensation value.
Meanwhile, the VAT rate for crypto transaction verification services by miners is 20% multiplied by 11/12 of the standard VAT rate, which under the VAT Law is currently 12%. (ASP/KEN)
