Indonesia’s Crypto Sector Seeks Tax Reforms to Compete Globally

Indonesia’s cryptocurrency industry calls on the government to revise its current tax policies and regulatory framework, warning that without urgent reform, it risks falling behind regional competitors such as Thailand and Japan.

Industry stakeholders argue that the current tax regime comprising a 0.2% final income tax and 0.11% value-added tax (VAT) on every crypto transaction is a deterrent to domestic investors and hinders the growth of local platforms.

Tax and Cost Pressures

While these rates may appear modest, crypto advocates say they add up quickly in high-frequency trading environments and effectively penalize traders and exchanges operating within Indonesia.

“When you combine taxes with the higher transaction fees on local platforms, it becomes difficult for Indonesian crypto services to compete with global exchanges,” said a leading Indonesian blockchain association spokesperson.

Many domestic platforms cannot match the lower fee structures of international exchanges, further incentivizing Indonesian users to trade offshore, an outcome that could erode local innovation and tax revenue in the long term.

Regional Competition Heating Up

Indonesia is one of Southeast Asia’s most promising digital asset markets, but regulatory inflexibility may hamper its potential. In contrast, Thailand and Japan have implemented more favorable tax environments for investors and crypto companies, attracting new capital and talent.

Thailand, for instance, recently scrapped VAT on crypto trades and announced incentives for blockchain firms. On the other hand, Japan continues refining its tax rules to attract Web3 and fintech investment.

“We need a competitive tax structure to position Indonesia as a regional crypto hub, not a backwater,” said a digital economy analyst based in Jakarta.

Calls for Reform

Industry groups are now urging Indonesia’s Ministry of Finance and Financial Services Authority (OJK) to:

• Reconsider or eliminate VAT on crypto transactions
• Introduce tiered or reduced income tax rates for retail investors
• Create clearer regulatory pathways for crypto startups and exchanges

There are also broader calls for coordination between tax authorities and the newly launched Commodity Futures Trading Regulatory Agency (Bappebti), which oversees digital asset trading in the country.

As Indonesia aims to digitize its economy and foster innovation, reforming crypto taxation could unlock investment, jobs, and new revenue streams. With regional competitors rapidly evolving their regulatory frameworks, the pressure is mounting on policymakers in Jakarta to act.

Unless addressed soon, Indonesia risks losing talent and capital to more crypto-friendly jurisdictions when global digital finance enters a critical new phase.