Spotlight On… Indonesia

In June 2021, Indonesia’s government proposed a comprehensive tax reform that included a VAT rate increase, new income tax brackets for individuals, a tax amnesty programme to allow taxpayers to declare undisclosed assets, an alternative minimum tax for operating loss-making businesses and a carbon tax. 

This accounts for the increased activity in tax developments over the past year and the introduction of new taxes, such as the carbon tax, as well as an extended focus on the digital economy. Unfortunately, Indonesia has postponed the proposed implementation of the carbon tax to 1 July 2022 to allow the government time to prepare various technical regulations beforehand so as to ensure that there are no gaps when simultaneously introducing the tax together with carbon trading. 

Meanwhile, Indonesia will impose income tax and VAT on crypto-asset trading transactions from 1 May 2022. Details can be found in the Minister of Finance Regulation Number 68/PMK.03/2022, dated 30 March 2022, which also provides guidance on those transactions that will be subject to income tax and those that will be subject to VAT. Click here for more details.