As cryptocurrencies become more widely used worldwide, countries are still fine-tuning their approaches to cryptocurrency legislation and oversight. 

Indonesia is one of the countries that has taken a clear approach to crypto-assets and is friendly to blockchain technology. New legislation has allowed residents to invest in and trade Bitcoin, despite some objections.

The Ministry of Trade recognized the trading of Bitcoin and crypto-assets as commodities in September 2018, making cryptocurrencies lawful.

The crypto waveThe rising trend of cryptocurrency and bitcoin has continued to develop in the Indonesian market. 

As of 2021, according to estimates from Triple-A, Indonesia ranks in the top 30 countries in terms of crypto asset ownership, trailing Malaysia and Vietnam, with a total number of 7.2 million people owning the crypto. 

Despite the fact that cryptocurrencies are legal in Indonesia, crypto organizations and the local crypto community face significant challenges. 

The Indonesian central bank does not recognize cryptocurrencies as a form of payment, which poses a significant barrier to broader adoption.

Furthermore, many banks are hesitant to offer crypto trading accounts, and there is still a lot of misinformation floating around about the nature of cryptocurrencies.

Following the massive popularity among local investors, Indonesia is mulling a plan to tax cryptocurrency trading.

Although Neilmaldrin Noor, a spokesperson for Indonesia's tax office, said a tax structure for cryptocurrency was still in the discussion stage, the Southeast Asian country has been seeking to shore up public coffers amid the coronavirus pandemic.

"However, the government can still use the general provisions of taxation rules. As stated in the Income Tax Law, any additional economic capacity is subject to tax. This includes the transaction that we are discussing [cryptocurrency], so it is still subject to tax with a self-assessment system," he said.

What are the Taxes on Cryptocurrency?

In America, you must pay taxes when you sell, trade, or dispose of bitcoin in any way and make a profit. For example, if you acquire $1,000 of cryptocurrency and then sell it for $1,500, you must declare and pay taxes on the $500 profit. You can deduct a tax loss if you sell cryptocurrencies and lose money.

However, legislators are having difficulty enacting legislation in Indonesia since crypto transactions are still in their infancy. As a result, the taxation plan must be scrutinized thoroughly.

Since 2021, the Directorate General of Taxes has indicated that crypto assets will be taxed. 

According to the criteria of Income Tax, any additional economic capacity received by the taxpayer, whether from Indonesia or elsewhere, is taxable (PPh). Bitcoin trading profits are recognized as taxable income in this circumstance as well.