Agung Endika Satyadini
On my way back home by a bus, I plugged my earphone, swiped my phone, launched Spotify, and then listened to a podcast channel dished out about Bitcoin. The podcast spilled out the beans that “Nobody can tax Bitcoin”. Is that true?
Hitting the road, it is important to think about Industry 4.0 concept as depicted by President Jokowi to foster the idea of digital transformation which importantly arrives a brand-new economic model and brings new challenges for tax authorities. I believe, fiscal policy perspective also acknowledged that digital transformation provides a spacious range of implications for tax policy and tax administration. Further, as OECD (2018) emphasized, tax policy implications of digitalization became very popular among international tax jurisdictions to speak louder than words in the efforts to provide a fair, neutral and equitable tax regime in an increasingly changing digital environment.
So then, it is worth noting that emerging digital economy is modifying the traditional concepts of economic activities. We will see that in the context of digital market transformation, the metamorphose of fiat currencies is only a matter of time, and surely the transition into digital currency is on the horizon. And not without acumen, a two-year blockchain technology milestone since 2017 is now arrived on today, and I wonder that 2019 until today is considered as the most critical stage of cryptocurrency evolution in Indonesia.
Now, let us highlight the size! It is true that Bitcoin’s future market price nearly doubled its previous peak price recorded last year. Since January 2019, the Bitcoin price has increased by at least 117%. Unfortunately, Bank Indonesia (BI) affirmed that cryptocurrency is not recognized as a valid payment instrument and prohibited to be used as a means of payment in Indonesia. Recently, Commodity Futures Trading Regulatory Agency (BAPPEBTI) recognizes Bitcoin as a trading commodity under crypto-asset exchange. Unluckily, again, while Bitcoin have experienced booms and busts in the market, tax jurisdictions heading the same complication to answer the basic questions about “how to tax it”.
Borrowing the Keynesian multiplier concept on the brain area of macroeconomic study, tax policy plays an essential role in preserving the stability and accelerating the uniform cycle of dynamic economic mechanism. It is crystal clear that dramatic development of cryptocurrency arrives with an alert of the expansion of underground economy, due to the unobserved manner of transaction and practical difficulties to cast it. In the other hand, at the same time, tax reliefs are desired to stimulate investment,
i.e. crypto-asset investment. In short, fiscal policy is confronted with a tax dilemma in the face of tax revenue target and tax incentives on cryptocurrency investment.
Borrowing a quote from Pak Susilo Bambang Yudhoyono (SBY), “those who are adaptive, innovative and open- minded, are the winners”. In this sense, as a big jurisdiction, Indonesia needs to be more adaptive and responsive. As the best response on today’s dynamic, Indonesia also needs to be innovative and open-minded on all threats and opportunities in taxing Bitcoin. Hinge on the concept of efficient tax system, tax rule on Bitcoin should be clear, simple and seek for both broader base and lower rate to reduce excess burden on society. I convinced that a simple tax system ease individuals and business to affirm their obligations. We may also agree that complexity deploy additional burden for the economy.
Additionally, addressing the issue of underground economy due to invisible ecosystem based on digital currencies, tax incentives provide a stone to kill two birds. A lower tax rate will be compensated with improvement on investment climate. Simultaneously, it also encourages the development of startup and entrepreneurial merchants to do a voluntary registration. Crossed fingers, it will deliver voluntary compliance in the long run.
Taken together, a swift evolution towards digital economy brings alert on massive evolution of financial sector and opens space of underground economy. However, addressing these issues, tax system should be designed to be more responsive, adaptive, and innovative on the ground of simplicity and equity. Highlighting a quote from Pak SBY again: we are the winners, just simply because we are adaptive, innovative, and open- minded.