How to Calculate Forex Trading Tax?

For those who plan to prosper in the future, foreign exchange (Foreign Exchange / Forex) can be a promising investment option. For this reason, many forex brokers have appeared offering great profits.

As we all know forex trading is the process of making a profit from the fluctuation of currency rates. Profits are obtained from exchanging one currency for another at a different rate.

Since it is global, the forex market can be said to be the largest and most liquid market in the world.

How to Calculate Forex Trading Tax?

Before trading forex, traders should pay attention to a number of aspects such as choosing a safe broker, how to analyze price movements, and choosing the right currency pairs.

In addition, no less important is knowing the costs incurred. Especially for Indonesian traders, there is a cost other than spreads, commissions and depositing money for brokers that needs to be taken into consideration, and that is forex tax.

Forex tax calculator

Taxes are compulsory levies levied on the various activities of every citizen. The forex tax application is regulated in the law. The regulations governing forex tax are outlined in Law No. 7 of 1983 and Law No. 36 of 2008 regarding income tax contained in Article 4 Paragraph (1) letter l. There, it is stated that gains from foreign currency exchange are included in the PPh tax object.

As mentioned in the explanation of the General Directorate of Taxes, the imposition of tax on income from foreign exchange gains is not a final tax object, so it is subject to the rate of Article 17 of the Income Tax Law.

The Indonesia forex tax account is included in the individual taxpayer subject to a progressive rate. Details here:

  • IDR 0 to IDR 50,000,000.00 at 5% rate.
  • IDR 50,000,001.00 to IDR 250,000,000.00 at 15% fee.
  • IDR 250,000,001.00 to IDR 500,000,000.00 at 25% rate.
  • More than IDR 500,000,000.00 is paid at 30%.
  • The tariff for corporate and permanent establishment (BUT) taxpayers is 25%.

If traders use the services of brokers from abroad, the obligation to pay taxes is not revoked so that the traders remain subject to income tax. The reason is that forex taxation is based on two aspects: the source principle and the domicile principle.

The Directorate General of Taxation clarified that the source principle applies to every taxable person who receives income from Indonesia, as long as the legal provisions on tax subjects and objects are met.

Meanwhile, the residency principle applies to every taxpayer who meets the residency requirements in Indonesia. Therefore, the income earned, whether it originates from sources of income in the country or abroad, is still subject to income tax by the Indonesian government.

The imposition of this forex tax would actually be very profitable, both for the traders and for the government. They no longer need to explain the flow of money into the banking sector, while the government can increase state revenues from the transactional activities of merchants.

Income tax report time

Tax reporting of income from foreign exchange differences is made when the annual SPT is submitted as part of other income (in accordance with the instructions for filling out the annual PPh SPT). The following are the deadlines for submitting reports:

Individual taxpayers no later than 3 months after the end of the tax year.
corporate taxpayers no later than 4 months after the end of the tax year

Timid? Forex tax advisors can be used

Basically, anyone can carry out forex trading activities independently. When preparing a forex tax related spending plan, novice or casual traders can seek help from the nearest tax advisor. Currently, tax consultants are widely deployed in major cities in Indonesia.

However, what you must remember is to use the services of a good, reliable tax advisor, who is legal, has certification, becomes a member of the Association of Tax Advisers, and provides a full service.