The Legal Framework and Taxation of Non-Fungible Tokens

Abstract

In order to ensure clarity, it is imperative that tax legislation regarding non-fungible tokens (NFTs) in Indonesia incorporates considerations of assessment values, collection procedures, and technical advancements. This would facilitate the seamless integration of NFTs into the country's economic system, while awaiting prompt government action. Discussions concerning legal protection for NFTs, particularly in the context of tax law, remain limited, with an emphasis on existing research pertaining to copyright law and intellectual property rights. The aim of this study is to scrutinize the legal protection of NFTs, specifically in relation to tax law, with the intention of providing a comprehensive understanding of NFTs within Indonesia's legal framework. This study employs a normative juridical research methodology to evaluate the legal protections afforded to NFT artworks, as well as the associated aspects of taxation. The normative juridical approach is an analytical strategy that scrutinizes legal norms and established legal concepts. The study utilizes a combination of primary and secondary legal sources, which are subsequently subjected to thorough analysis and assessment. The analysis reveals that there are currently no tax liabilities associated with NFTs in Indonesia. Consequently, due to the absence of tax legislation, there is a lack of regulations governing the taxation of NFTs and other cryptocurrencies. Evading taxes could potentially result in a decline in government revenue from the informal sector. Therefore, stringent oversight and judicious regulation are essential for establishing a transparent and equitable legal framework for NFTs and cryptocurrencies in Indonesia.