Lately, the Non-Fungible Token (NFT) business has become increasingly popular with the public and public figures in Indonesia, namely Syahrini, who has just launched her first NFT in the form of an avatar of herself named Metaverse or Anang-Ashanty, who plans to issue their family NFT under the name ASIX. Not only from public figures, the NFT universe in early 2022 was also enlivened by the Ghozali Everyday account, which made billions of Rupiah thanks to the NFT business it developed. Imagine, by selling selfies of himself as an NFT product, Ghozali earned as much as 194 Ethereum Cryptocurrency (ETH) or the equivalent of IDR 8 billion. Departing from these developments, starting January 2022 the government finally determined that NFTs will be taxed and must be reported in the Annual Tax Return. This is because NFTs have become an object of investment as well as buying and selling in the digital world. Then, what exactly is an NFT, why are NFTs taxed, and what are the rules regarding NFTs as assets in Indonesia? To find out the answer, Contract Law will explain it below. Check out the discussion until the end.
What is NFT?
Non-Fungible Token (NFT) is a digital asset, proof of ownership of a work, as well as an investment product based on Blockchain technology and can only be purchased with Cryptocurrency. NFTs become part of the Blockchain system so that every transaction related to NFTs will be recorded in a data on the Blockchain. NFTs are different from other crypto assets. This is because NFTs cannot be exchanged for other NFTs, such as bitcoin which has the same exchange rate. In NFT assets, there is a digital signature that is different from other NFTs so that each NFT has a different value.
What can be traded in NFTs?
With NFTs, it is possible to convert any asset, artwork, or collectible into digital form and trade it. Currently, NFTs are widely used for digital artwork in the form of GIFs, tweets, images of physical objects, and video game skins. Apart from artwork, there are other types of NFTs, such as video clips, music, and games. Although it is publicly marketed and digital, NFT owners do not need to worry about plagiarism, because the recording of information about the creator, price, and ownership history of NFT assets is automatically carried out in the Blockchain system.
What is the legal regulation of NFT in Indonesia?
In Indonesia, the rules on property in the Civil Code state that property is every object and every right that can be the object of property rights. The objects in question can be tangible, intangible, movable, and immovable objects. Meanwhile, rights that can be the object of property rights are copyright, patent rights, and trademark rights.NFTs as digital assets are actually included in objects. However, NFTs are new objects and things from the development of the Crypto world so that until now there has been no regulation issued specifically to regulate NFTs in Indonesia.
Is income from NFTs taxable?
The answer is yes, because income from buying and selling NFTs is considered income. Article 3 number 1 of the Tax Harmonization Law states that the object of tax is income. Income is any additional economic capacity received or obtained by the taxpayer, whether originating from Indonesia or from outside Indonesia, which can be used for consumption or to increase the wealth of the taxpayer concerned, by name and in any form. This means that every asset that provides income in any form including digital and adds to the taxpayer’s wealth is a tax object. When an NFT buying and selling transaction occurs, the NFT owner will certainly benefit from the trade transaction and the profit can be considered as income that must be taxed.
How to set up NFT income tax calculation?
Because there are no special rules regarding NFT digital assets, the rules regarding income tax that apply to the NFT tax imposition scheme are based on Article 3 number 7 of the HPP Law, the PPH rate is divided into:
- 5% rate for taxable income up to IDR 60 million.
- 15% rate for income of IDR 60 million – IDR 250 million.
- 25% rate for income of IDR 250 million – IDR 500 million.
- 30% rate for income of IDR 500 million – IDR 5 billion.
- 35% rate for income of more than IDR 5 billion.
Well, that’s an explanation of what NFTs are, why NFTs are taxed, and what the rules are regarding NFTs as assets in Indonesia. From the explanation above, it can be concluded that NFTs are digital assets with various types and forms, ranging from works of art, collectibles, to physical objects that can be traded for crypto money. Because the sale and purchase transactions will provide income to the NFT owner, the government finally determined that NFTs are taxable and must be reported in the Annual Tax Return. If Sobat KH has any questions regarding NFTs, wants to consult regarding taxes for NFT assets, or other legal issues, do not hesitate to contact Kontrak Hukum at the following link Tanya KH. Kontrak Hukum is ready to help and provide solutions that are fast, easy, and affordable.
