New Tax Provisions for Carbon Trading: What Market Players Need to Know

The Ministry of Finance's latest circular clarifies the tax treatment of carbon credits traded on the IDX Carbon exchange, ending months of ambiguity that had stalled secondary-market activity.

Under the new rules, gains on the sale of credits acquired through compliance allocation will be treated as ordinary income, while voluntary-market trades fall under a separate withholding regime.

Market participants broadly welcomed the clarity but flagged unresolved questions around cross-border transfers and the recognition of internationally issued credits.