pro-visioner.com/pvk – Attention, Crypto Assets are Taxable! What are the objects of taxation on crypto transactions? How are the tax obligations resolved?
There is a new trend in global economics and finance. Many people are drawn into this new trend to the extent that economic observers predict this trend will change the financial system in the future. What is the new trend that the author is referring to? Well, it’s not crypto.
This crypto boom has made the government, in this case, the Ministry of Finance represented by the Directorate General of Taxes see it as a huge potential to contribute to state revenue in the taxation sector. As a result, in mid-April 2022, the latest regulation on crypto asset tax emerged.
That’s why the author sees the right moment to talk about crypto in terms of taxation in our country, what are the objects of taxation on crypto transactions and how to settle tax obligations will be thoroughly discussed in this edition.
What the heck is crypto?
Crypto assets are digital currencies used for virtual transactions on the internet. Complex secret passwords serve to protect and maintain the security of this digital currency known as cryptocurrency. The name comes from a combination of two words-cryptography ‘secret code’, and currency ‘currency’.
The concept of cryptography has been around since the days of World War II. At that time, the Germans used cryptography to transmit secret codes that could not be easily read by their opponents. Unlike conventional currencies that are centralized, digital currencies are decentralized. No party is present and acts as an intermediary in a transaction.
Payments with digital currency take place from sender to receiver or peer-to-peer. However, all transactions made are still recorded and monitored in the Crypto Asset network system. Crypto Asset miners record these transactions and earn a commission in the form of usable digital money.
Although cryptocurrencies have been developed since the 1990s, it has only been about the last 10 years that they have been recognized by the global community. Some types of Crypto Assets that are often used include Litecoin, Ethereum, Monero, Ripple, and of course Bitcoin. There are currently more than 1,000 Crypto Assets circulating around the world, and there will be more and more in the future.
According to PMK No. 68 of 2022 Article 1, what is meant by Crypto Assets is an intangible commodity in the form of digital assets, using cryptography, peer-to-peer networks, and distributed ledgers, to regulate the creation of new units, verify transactions, and secure transactions without interference from other parties.
Mining
The term mining is also used to acquire these cryptocurrency assets. Just as gold miners dig into the earth, cryptocurrency miners try to mine cryptocurrency by solving math problems to add new blocks to the blockchain system. So, the cryptocurrency is mined by a cryptocurrency miner.
Cryptocurrency miners can then sell their cryptocurrency assets from the mining results and cryptocurrency buyers can also trade their assets.
According to PMK No. 68 of 2022, what is meant by Crypto Asset Miners are individuals or entities that carry out Crypto Asset transaction verification activities to obtain rewards in the form of crypto assets, either individually or in a group of crypto asset miners (mining pool).
How to mine
Of course, unlike mining gold or coal which uses heavy equipment to dredge the soil and rocks, mining crypto assets is done by using a computer connected to the internet.
Crypto mining uses specialized computer equipment to solve algorithms or mathematical calculations of cryptocurrency transactions made by miners. The computer or PC used to mine cryptocurrency must also be qualified, considering that there are many other miners who are also scavenging for crypto assets.
To be able to mine cryptocurrency, you usually need a crypto mining machine with a certain type of hardware, for example Antminer S19 Pro or M30 S++. These crypto mining devices or machines or bitcoin machines are usually traded on e-Commerce, with relatively quite expensive prices. Not to mention, miners must also have software to mine.
Crypto miners are also required to have a cryptocurrency wallet to place their mining results. Miners often work together with other miners to facilitate algorithm solving.
Transaction tax
First, it must be understood that crypto is not an official medium of exchange like fiat currencies (read: banknotes) that are valid in our country but is a commodity that is allowed to be traded in our country. In this case, the physical trading of crypto assets is under the auspices of Bappebti (Badan Pengawas Perdagangan Berjang).
First, it must be understood that crypto is not an official medium of exchange like fiat currencies (read: banknotes) that are valid in our country but is a commodity that is allowed to be traded in our country. In this case, physical trading of crypto assets is under the auspices of Bappebti (Commodity Futures Trading Supervisory Agency) of the Ministry of Trade of the Republic of Indonesia. In Regulation No. 7 of 2020, Bappebti established a List of Crypto Assets that Can Be Traded on the Crypto Asset Physical Market. This means that only crypto asset platforms registered with Bappebti can trade cryptocurrencies in Indonesia.
In PMK No. 68 of 2022, the term used for crypto asset platforms registered with Bappebti is PPMSE (Trading Through Electronic Systems Operator), which is a business actor that provides electronic communication facilities used for crypto asset trading transactions, including crypto asset physical traders.
Second, the tax imposition on crypto cannot use the general VAT rules, because in ordinary trading it can be seen who the seller and buyer are. In crypto, if you use a normal mechanism, it will not be taxable, because the perpetrators often use pseudonyms (pseudonyms) and even anonymous (without identity), so it is not visible who is transacting but the real movement in the market or market is visible.
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The basis of taxation is in the form of VAT and income tax seen from the movement of Crypto Assets. The movement of Crypto Assets in PMK No. 68 of 2022 is divided into three (3) objects:
Trading
Exchanger Service
Mining
Taxation example
Crypto Buy-Sell Calculation:
Mr. A owns 1 XX crypto asset coin worth IDR 200 million and Ms. B owns IDR money stored in an e-wallet provided by a platform registered with Bappebti. Then Mr. A sells 70 percent of the coin to Miss B.
Then Mr. A will be subject to Final Income Tax Article 22 with a calculation of 0.1% x (0.7 coins x IDR 200 million) = IDR 140 thousand.
Miss B will be subject to VAT with a calculation of 1% of 11% or equal to 0.11% x (0.7 coins x Rp 200 million) = Rp 154 thousand.
The collection and deposit will be done by the exchange platform.
Example of Tax on Trade Transactions (1)
Crypto Swap Calculation:
Ms. B exchanges 30 percent of XX crypto coins for 30 of Mr. C’s YYY crypto coins. When they made the exchange, the price of 1 XX crypto coin was IDR 500 million. They conducted the transaction on a crypto platform registered with Bappebti.
Then Ms. B will be subject to Final Income Tax Article 22 of 0.1% x (0.3 x Rp 500 million) = Rp 150 thousand. Mr. C is subject to VAT tax of 0.11% of 11% x (0.3 x IDR 500 million) = IDR 165 thousand.
Collection and deposit are carried out by the crypto platform.
Example of Tax on Trade Transactions (2)
“Exchanger” tax
Examples of exchanger services and income:
services of providing Electronic Facilities used for Crypto Asset transactions;
withdrawal services;
delivery of deposit services;
delivery of Crypto Asset transfer services between e-wallets;
provision and/or management of Crypto Asset storage media or electronic wallets (e-wallets);
other services in connection with Crypto Assets
The above services and income are Taxable Services in general in accordance with the provisions of the VAT mechanism, such as the confirmation of PKP, VAT collection from service recipients, VAT remittance, and VAT reporting. Meanwhile, income in the form of compensation for services provided by exchangers is an income tax object and is subject to income tax with the applicable general provisions and rates.
Tax on ‘mining’
Miners perform crypto asset transaction verification service activities and are incentivized in the form of:
income from the Crypto Asset system in the form of block rewards, fees for transaction verification services (transaction fees), fees for management services for groups of Crypto Asset Miners (mining pools), or other income from the Crypto Asset system; and/or
other income.
The VAT obligations arising are:
– Collecting VAT with a Certain Amount of 1.1% x the value in the form of money for Crypto Assets received, and Miners must have been confirmed as PKP.
Income Tax Obligations:
– Self-remit Final Income Tax Article 22 of 0.1% x Income received or earned, excluding income in the form of fees for group management services of Crypto Asset Miners (mining pool)
Proof of collection
Single document for the collection of income tax and VAT on the delivery of crypto assets through PPMSE (Electronic Trading System Operator) in the form of a document equivalent to Proof of Withholding / Unification Collection of Income Tax (modification of information details to accommodate VAT) and Proof of Withholding / Unification Collection as a specific document for PKP seller of crypto assets.
