What are the taxes to cash out your crypto in Bali / Indonesia
Crypto currency is a double edged sword where you either make it big, or lose it all (or nearly all). If you’ve managed to make it out alive during this cycle and wish to cash out your profits in fiat money in order to diversify your investments or spend your gains, you might be interested in doing so in Bali.
Here is what you must know about cashing out your crypto investments in Indonesia.
Should you cash out your crypto in Indonesia?
If you are a crypto hodler, you could be asking the question : “Should I consider cashing out my crypto in Indonesia?”.
The short answer is maybe.
Indonesia does offer serious advantages for their residents that want to cash out their crypto at a decent tax-rate.
The country also has a lot of incentives to attract foreign investors that are willing to invest in the country.
So if you are interested in living in Bali or anywhere else in Indonesia and are sitting on a significant bag, you may have serious opportunities laying around if you are willing to.
If you are already living in Indonesia, then you will probably withdraw your investment here and benefit from some of the perks as well.
What is the tax rate when you sell cryptocurrencies to fiat in Indonesia?
Withdrawing your crypto in Indonesia, meaning selling your crypto assets for Indonesian rupiah on an exchange and then transferring back to your account is subject to the following taxes :
- 0.1% final income tax if it’s withdrawn from an approved Indonesian exchange
- 0.2% final income tax if it’s withdrawn from a non approved (and / or foreign) exchange
For most transactions crypto to crypto (swaps), crypto users also have to pay a small VAT fee:
- 0.1% of the transacted amount if the exchange is approved by Indonesian authorities
- 0.2% of the transacted amount if the exchange is not approved / foreign
So even if it’s not “tax-free”, Indonesia is still a very good jurisdiction to withdraw your money to fiat at a more than decent rate.
How are the taxes on crypto withdrawal handled and reported to the Indonesian tax department
In Indonesia, crypto exchanges are the entities responsible for collecting the income tax, including the personal income tax, of the residents.
This means that if you are an Indonesian resident who cash out your crypto from an Indonesian exchange approved by the tax department, the exchange will collect and give your income tax on that particular transaction to the tax government.
You do not need to provision or wire the money yourself.
You will, however, need to report it on your annual tax return.
What are the steps to withdraw cryptocurrencies at 0.1% tax in Indonesia if you are not an Indonesian resident?
If you are currently living outside of Indonesia and considering relocating to cash out your crypto and live in a tropical country, here are the steps you need to follow.
Step 1: Live in Indonesia and become an Indonesian resident (Get a KITAS)
To be eligible for a 0.1% tax rate on your crypto withdrawals, especially if you come from a high tax country, you’ll first need to become an Indonesian resident. To do so, you’ll need to obtain what we call a KITAS.
You have several options to do so:
- Investing in Indonesia
- Creating a company in Indonesia
- Being employed in an Indonesian company
- Having high enough revenues as a digital nomad
- Being married to an Indonesian citizen
The KITAS is the key to unlocking many perks of the residency to Indonesia, and in most cases to prove to your country of origin that you truly live here.
For most details about KITAS, read this article.
Step 2: Apply for a tax Identification number (NPWP)
Once you are an official resident of Indonesia, you’ll need to report your worldwide income to the official authorities.
To do so, you’ll need a tax ID number called an NPWP.
The NPWP will be the key to report your taxes, but also to open bank accounts and other things only residents can do.
Step 3: Open a bank account in Indonesia
If you want, you can open a bank account in Indonesia, which would not only help you to withdraw your fiat money, but also help in your daily Indonesian life.
You can do so easily once you have a KITAS and an NPWP.
Step 4: Transfer your crypto currencies to an Indonesian exchange
If your crypto is on a hard wallet or a foreign exchange, the simplest way to withdraw it legally and at the lowest possible tax rate is to transfer them to an approved Indonesian exchange.
This Indonesian exchange will then collect your income tax on your behalf.
Step 5: Sell your cryptocurrencies for fiat currencies
That’s it, you are about to cash out! Sell your cryptocurrencies for fiat money that you can withdraw in Indonesia, which is in most cases Indonesian Rupiah (IDR).
Step 6: Transfer the fiat currencies from the Indonesian exchange to your Indonesian bank account
You can now transfer your rupiah into your Indonesian bank account. The tax has already been collected by the exchange, so whatever is coming in your account is the final amount you will receive.
Note that many Indonesian banks have multicurrencies bank accounts. So if you are not comfortable with holding a large amount of rupiah, you can always exchange them for USD, EUR, SGD or any other currency available.
Step 7: Report the withdrawal on your annual tax return
You do need to declare the amount your withdrew on your annual tax return. Tax return generally need to be filled before the end of March, each year.
Step 8: Spend or reinvest your money
Once the money is here, you are free to do almost whatever you want with it.
You can spend it to travel the Indonesian archipelago, invest it in real estate in Bali, give it to your loved ones, start a business or reinvest it into something less risky than crypto (even if it’s boring).
Conclusion
Indonesia certainly is quite friendly when it comes to crypto taxes. You can cash out your money for 0.1% final income tax rate, which is much less than in most other countries.
If you are currently a resident in Indonesia, few countries will offer you better rates.
If you are currently living in a high tax country and are willing to relocate to Bali or anywhere else in Indonesia to cash out your crypto, it might be financially very interesting to do so.
In all cases, feel free to get in touch with our team if you need any help to set up your system to get residency and legal advice in Indonesia.
