INDONESIA: VAT on Fintech Services and Crypto Transactions Starts 1 May

Indonesia has imposed value-added tax (VAT) on financial technology (fintech) services starting 1 May 2022. As contained in the Law on the Harmonization of Tax Regulations (HPP) Law No. 7 of 2021, which came into force in October 2021, a variety of fintech operation services are charged 11% VAT. The Ministry of Finance emphasised that VAT applies to businesses’ service charge, not the value of the transaction. 

VAT is due on payment services, such as electronic money and digital wallet transactions, including topping up or withdrawing e-money balances, digital fund transfers, bill payments and pay-later services. Other services include digital finance support, capital raising, peer-to-peer lending (P2P), investment transactions settlement, market support, online insurance, and investment management. Certain services are exempt, such as money in the form of electronic media through bonus points and top-up points, and certain financing activities through P2P platforms. 

Crypto asset transactions on authorised trading platforms will also pay 0.1% each in VAT and income tax from 1 May. Trading on platforms not authorised by regulators attracts a higher rate of 0.2% for both VAT and income tax.