- Indonesia and Australia have signed a memorandum of understanding to allow mutual cryptocurrency information sharing between the countries
- The crypto information exchange will help each nation to more efficiently determine crypto assets within their jurisdictions that have tax liabilities
- The collaboration will also help either nation to exchange relevant knowledge to ensure crypto tax compliance
Indonesia and Australia entered a new partnership on Monday that will allow mutual sharing of cryptocurrency information between the nations. According to a press release Tuesday, the Indonesian Directorate General of Taxes (DGT) and the Australian Taxation Office (ATO) signed a memorandum of understanding for such information sharing, intending to detect crypto assets with tax liability.
In addition to crypto-related information and data sharing between the two countries, the partnership seeks to enhance the exchange of specialized knowledge that will help the two countries manage crypto tax compliance more efficiently.
Announcing the development, Mekat Satria Utama, DGT’s Director for International Taxation said the memorandum of understanding expressed the need for tax authorities to level up with the rapidly evolving global FinTech space through innovation and collaboration.
“While crypto assets are relatively new, the need to ensure equitable taxation remains essential to promote economic growth and provide revenue for crucial public investments in areas like infrastructure, education and healthcare,” Utama said.
The Indonesian Ministry of Finance revealed last year that the country’s total crypto tax revenue in 2023 was $31.7 million or 467 billion Rupiah. That figure represented a 63% collapse from the previous year’s tax revenue and is largely attributed to the dual taxation system in the country.
In May 2022, Indonesia started subjecting crypto transactions to a dual tax system of 0.1 income tax and 0.1 VAT (value-added tax). The government insisted that the VAT was necessary because crypto assets “are a commodity as defined by the trade ministry” while mandating local exchanges to pay 0.04% tax.
These tax demands have heavily burdened local exchanges and Indonesian crypto investors, forcing most investors to drift to offshore crypto exchanges to evade the burdensome tax regime.
Several local crypto exchanges raised the alarm over the high crypto taxes and blamed the government’s rapidly receding crypto tax revenue on the value-added tax on crypto assets. However, there are yet to be any positive actions by the government towards alleviating the high tax situation.
The recent move by the Indonesian Directorate General of Taxes to partner with the Australian Taxation Office over crypto information sharing and tax compliance seems like an effort by the Indonesian government to reinforce its waning crypto tax system and close any revenue loopholes.
Speaking about the partnership, the Assistant Commissioner of the Australian Taxation Office said:
“The partnership between the DGT and ATO goes back nearly two decades and is now focused on strengthening the tax systems in both countries and enhancing our collaboration on complex global challenges.”
Australia seems to have a more established crypto tax regime than its Southeast Asian partner. Crypto asset investments are generally subject to CGT (Capital Gains Tax), including wrapped tokens or other token activities with decentralized lending protocols. The ATO also provides specific guidelines for staking rewards and airdrops on when they qualify for ordinary income or capital gains taxes.