Indonesia Set to Impose Income Tax on Crypto Assets from May

Indonesia, the largest economy in Southeast Asia, announced plans to charge value-added tax (VAT) on crypto-asset transactions as well as an income tax on capital gains from such investments at 0.1% each, beginning May 1st.

A tax official made the announcement last Friday amid a boom in crypto asset trading in the country. In a statement, Hestu Yoga Saksama, the tax office spokesperson, said: “Crypto-assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency. So, we will impose income tax and VAT.”

Saksama further disclosed that the government is still working on implementing regulations for taxes associated with crypto assets.

The VAT rate on cryptocurrencies is well below the 11% imposed on most goods and services in Indonesia, while the income tax on capital gains, at 0.1% of gross transaction value, matches that on shares.

The official stated that a wide-ranging tax law that the government passed last year was the legal basis for taxes on crypto assets. He mentioned that the law aims to enhance revenue collection, which was hit by the economic and social disruption caused by the Covid-19 pandemic.

Cryptos on the Rise in the Country

In January, Indonesia’s Financial Services Authority (OJK), the government agency in charge of regulating the financial sector, warned that financial companies are not allowed to provide and facilitate sales of cryptocurrencies amid a boom in crypto trading in the country.

The OJK banned financial service institutions from using, marketing, and facilitating crypto trading. The regulator also warned that the value of cryptocurrencies often fluctuates and that individuals purchasing digital assets should fully understand the risks.

Indonesia allows sales of cryptocurrencies in the commodities exchange and trading, which is supervised by the Commodity and Futures Trading Regulatory Agency (CoFTRA) under the Ministry of Trade, not by the OJK.

Currently, the ministry is facilitating the setup of a separate bourse for digital assets, known as the Digital Futures Exchange, within this year.

Interest in digital assets has surged in Indonesia during the COVID-19 pandemic, with the number of crypto holders rising to 11 million by the end of last year.

Last year, the total crypto transactions in commodity futures markets climbed to 859.4 trillion rupiahs ($59.8 billion), up more than 10 times from the transaction value witnessed in 2020, according to data from the Commodity Futures Trading Regulatory Agency.

The government allows Indonesians to trade crypto assets as a commodity but not to use them as a means of payment.

 

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Indonesia Set to Impose Income Tax on Crypto Assets, Starting from May

Indonesia, the largest economy in Southeast Asia, announced plans to charge value-added tax (VAT) on crypto-asset transactions as well as an income tax on capital gains from such investments at 0.1% each, beginning May 1st.

A tax official made the announcement last Friday amid a boom in crypto asset trading in the country. In a statement, Hestu Yoga Saksama, the tax office spokesperson, said: “Crypto-assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency. So, we will impose income tax and VAT.”

Saksama further disclosed that the government is still working on implementing regulations for taxes associated with crypto assets.

The VAT rate on cryptocurrencies is well below the 11% imposed on most goods and services in Indonesia, while the income tax on capital gains, at 0.1% of gross transaction value, matches that on shares.

The official stated that a wide-ranging tax law that the government passed last year was the legal basis for taxes on crypto assets. He mentioned that the law aims to enhance revenue collection, which was hit by the economic and social disruption caused by the Covid-19 pandemic.

Cryptos on the Rise in the Country

In January, Indonesia’s Financial Services Authority (OJK), the government agency in charge of regulating the financial sector, warned that financial companies are not allowed to provide and facilitate sales of cryptocurrencies amid a boom in crypto trading in the country.

The OJK banned financial service institutions from using, marketing, and facilitating crypto trading. The regulator also warned that the value of cryptocurrencies often fluctuates and that individuals purchasing digital assets should fully understand the risks.

Indonesia allows sales of cryptocurrencies in the commodities exchange and trading, which is supervised by the Commodity and Futures Trading Regulatory Agency (CoFTRA) under the Ministry of Trade, not by the OJK.

Currently, the ministry is facilitating the setup of a separate bourse for digital assets, known as the Digital Futures Exchange, within this year.

Interest in digital assets has surged in Indonesia during the COVID-19 pandemic, with the number of crypto holders rising to 11 million by the end of last year.

Last year, the total crypto transactions in commodity futures markets climbed to 859.4 trillion rupiahs ($59.8 billion), up more than 10 times from the transaction value witnessed in 2020, according to data from the Commodity Futures Trading Regulatory Agency.

The government allows Indonesians to trade crypto assets as a commodity but not to use them as a means of payment.

 

Image source: Shutterstock

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Financial Administration In Slovenia Proposes Special 10% Tax On Crypto Income

Slovenia, though small, is one of the fastest-growing nations in Europe, especially in the business and economic contexts. After its successful economic succession from Yugoslavia, it was the first to join the European Union in 2004 and is the wealthiest Slavic nation, as measured by per capita GDP. Crypto adoption in Slovenia has rapidly grown over the years. The awareness of cryptocurrencies among its citizens is relatively high.

The Proposed Crypto Tax Bill

According to reports by local media, the Financial Administration of the Republic of Slovenia (FURS) has put forward a proposal to change the crypto taxation rules in the country. This proposal aims to introduce a 10% taxable income bill on cryptocurrency asset activity in the near future. The country’s tax authority claims that this change would significantly simplify the way crypto-related income is taxed.

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Currently, the authority has to analyze an individual’s crypto activity on a case-by-case basis. It examines numerous transactions made by a taxpayer between the purchase and sale of the digital currency as well as the various cryptos they have bought and sold or converted. If the amendments are introduced, the financial administration elaborated that it would no longer have to go through this stagnant and tedious crypto administrative process.

Related Reading | Making Money in Bitcoin Markets? Don’t Forget About Crypto Taxes

“We would like to emphasize that it is not profit which would be taxed but rather the amount a Slovenian tax resident receives on their bank account on turning the virtual currency into cash or when buying a thing.” FURS said according to the media.

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Crypto Adoption In Slovenia

In recent times, Slovenia has projected itself as a hotspot for blockchain and cryptocurrency-related activities. With an estimated population of 2 million, the country contains more physical locations accepting cryptocurrency payments than the entire United States.

Related Reading | Slovenia’s Bitcoin City to Become World’s First Fully Crypto Friendly Lifestyle Center

According to GoCrypto, in 2020, more than 1,000 locations now allow cryptocurrency payments, including cafes, restaurants, dentists, hair salons, and hotels. At the beginning of 2019, it was also the only country in the world where you could survive solely on cryptocurrencies.

Featured image from The Slovenia Times, Chart from TradingView.com

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Compass Mining To Offer U.S. Clients Tax-Efficient Bitcoin Mining

U.S. Clients of Compass mining can now mine bitcoin directly into a Choice Individual Retirement Account without triggering a taxable event.

U.S. Clients of Compass mining can now mine bitcoin directly into a Choice Individual Retirement Account without triggering a taxable event, per a press release sent to Bitcoin Magazine.

Under the current tax laws, revenue from Bitcoin mining is taxed as income. Currently, miners must also pay capital gains taxes when they are forced to sell some of their bitcoin to cover other tax obligations.

Through mining in a Choice account, miners avoid taxes on their bitcoin revenue in the short term and potentially indefinitely, depending on which type of IRA they use.

In the statement sent to Bitcoin Magazine, Compass explained: “tax-efficient mining presents enormous benefits to retail miners and empowers them with another tool to mine even more profitably at a smaller scale.”

Choice is an independent, qualified custodian regulated by the South Dakota Division of Banking and an offering of Kingdom Trust Company. In May of 2020 Choice became the first retirement provider to offer a single account for all client retirement assets, physical or digital, legacy or traditional. The Choice platform currently hosts over 125,000 retirement accounts, with over $18 billion assets under custody.

Compass mining allows users to effectively mine without worrying about the logistics of mining through purchasing and renting machines that are then housed, maintained, and operated on the client’s behalf. It is the fastest growing marketplace for average investors to mine profitably at a wide range of scales. Retail miners are provided access to the same high-quality mining hardware and verified hosting facilities as large scale industrial competitors.

In July, Compass Mining reached over 450 petahash (PH) of hashrate across all its mining customers. The tax benefits of mining to a Choice IRA account are limited to retail miners who have purchased hardware through Compass. The mining payouts are then sent directly to the Choice account.

Ryan Radloff, CEO of Choice commented, “Being able to purchase a Compass miner within your IRA and mine bitcoin in a tax-advantaged account is an incredible opportunity. Our entire team is excited to work with Compass and as the industry continues to evolve.”

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South Korea will Impose a 20% Tax on Capital Gains from Cryptocurrencies Next Year

The South Korean administration is not relenting on its quest to levy a 20% income tax on capital gains from crypto transactions in 2022, despite growing investor concerns for the taxation plan to be delayed.

Crypto gains will be classified as “miscellaneous income”

During a vice-ministerial interagency meeting, the South Korean government revealed that its 20% income tax plan on cryptocurrencies would continue to implement next year. 

Koo Yoon-cheol, the head of government policy coordination under the Prime Minister’s office, chaired the meeting. He noted:

“Gains from cryptocurrency transactions will be classified as ‘miscellaneous income’ and will be subject to a 20 percent tax starting next year. Virtual asset gains must be reported when filing for general income taxes in May 2023.”

The Financial Service Commission, the nation’s monetary watchdog, is responsible for regulating and overseeing the cryptocurrency market. On the other hand, the science ministry is mandated with boosting the growth of the blockchain industry.

Special governmental campaign against illegal crypto activities

It also decides that the relevant authorities would extend the special governmental campaign time frame for cracking down and monitoring unlawful crypto activity to September 2021.

In February this year, the South Korean Ministry of Economy and Finance announced that investors making at least 2.5 million won, or approximately US$2,260 from crypto trading, would be subjected to the 20% income tax. It also pointed out that crypto inheritances and gifts would also be taxed. In such cases, the calculation of asset price would be based on the daily average price for one month before and one month after the date of the inheritance or gift.

Crypto taxation has been a burning issue in South Korea since the nation’s parliament last year brought up the crypto taxation bill.

Therefore, cryptocurrency investors find themselves in a difficult position because of the heavier taxes imposed on their gains than with stock investment.

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South Korea to Impose a 20% Tax on Capital Gains from Cryptocurrencies Next Year

The South Korean administration is not relenting on its quest to levy a 20% income tax on capital gains from crypto transactions in 2022, despite growing investor concerns for the taxation plan to be delayed.

Crypto gains will be classified as “miscellaneous income”

During a vice-ministerial interagency meeting, the South Korean government revealed that its 20% income tax plan on cryptocurrencies would continue to implement next year. 

Koo Yoon-cheol, the head of government policy coordination under the Prime Minister’s office, chaired the meeting. He noted:

“Gains from cryptocurrency transactions will be classified as ‘miscellaneous income’ and will be subject to a 20 percent tax starting next year. Virtual asset gains must be reported when filing for general income taxes in May 2023.”

The Financial Service Commission, the nation’s monetary watchdog, is responsible for regulating and overseeing the cryptocurrency market. On the other hand, the science ministry is mandated with boosting the growth of the blockchain industry.

Special governmental campaign against illegal crypto activities

It also decides that the relevant authorities would extend the special governmental campaign time frame for cracking down and monitoring unlawful crypto activity to September 2021.

In February this year, the South Korean Ministry of Economy and Finance announced that investors making at least 2.5 million won, or approximately US$2,260 from crypto trading, would be subjected to the 20% income tax. It also pointed out that crypto inheritances and gifts would also be taxed. In such cases, the calculation of asset price would be based on the daily average price for one month before and one month after the date of the inheritance or gift.

Crypto taxation has been a burning issue in South Korea since the nation’s parliament last year brought up the crypto taxation bill.

Therefore, cryptocurrency investors find themselves in a difficult position because of the heavier taxes imposed on their gains than with stock investment.

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South Korea Plans to Postpone Cryptocurrency Tax Rule to January 2022

South Korea is planning to delay the implementation of its crypto income tax rules to January 2022.

According to a report by local media outlet DongA, the move to extend the implementation date by three months from the initial October date to January of the following year is been advocated by lawmakers belonging to the country’s National Assembly.

The Emergence of The Bill and The Proposed Extension 

Earlier Blockchain.news reported that South Korea intends to levy a 20% income tax on cryptocurrency gains through a bill proposed by the country’s legislative body. The taxes will be administered on capital gains of at least 2.5 million South Korean Won ($2262.49). The proposed crypto tax bill, which is also scheduled to tax gains from Initial Coin Offerings (ICOs) and mining operations, came amidst the perception of increasing growth in cryptocurrency exchanges and crypto-related transactions and activities in South Korea.

With the implementation of tax rules scheduled to commence in October 2021, the parliament’s proposed extension is in response to cryptocurrency exchanges in South Korea, who said they needed more time to develop the capacity for the required tax reporting system.

The build-up to the implementation of the crypto tax rules involves compliance with the Special Financial Information Act, which mandates that exchanges need to complete a business report by having a deposit and withdrawal account that can verify crypto exchange users’ real names. This is scheduled to be completed by September 2021 before the new crypto tax extension move is onboarded. There is no indication that the proposed extension will affect this deadline at the time of writing.

South Korea and Clampdown on Cryptocurrency Exchanges

Through its law enforcement agencies, South Korea has earned a reputation for clamping down on cryptocurrency exchanges with questionable financial transactions. The Korean police raided Bithumb’s office on at least two occasions on fraudulent allegations against the crypto exchange’s Chairman. 

Given its track record, South Korean authorities may be strict on cryptocurrency exchanges that violate the crypto income tax rules once this eventually comes into effect.

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