Finance Ministry affirms VAT on digital trade for US companies will continue

Jakarta (ANTARA) - The Ministry of Finance has affirmed that US digital service companies will continue to be subject to value-added tax (VAT) on trade through electronic systems (PMSE).

Director General of Economic and Fiscal Strategy at the Finance Ministry, Febrio Kacaribu, explained during the February 2026 edition of the APBN KiTa press conference in Jakarta on Monday that PMSE VAT differs from the type of tax referenced in the Indonesia-US Agreement on Reciprocal Trade (ART).

Under the agreement, the Indonesian Government committed not to impose a digital services tax or similar levy that discriminates against US companies either in law (de jure) or in practice (de facto).

However, the Indonesian Government will continue to levy VAT on US companies provided the same provisions are applied equally to other countries.

“PMSE [VAT] will continue because it is non-discriminatory in nature. So, the VAT collected by the Directorate General of Taxes on PMSE will remain in effect,” said Febrio.

He underscored that the digital tax referenced in the ART must be distinguished from taxes that comply with Indonesian laws and regulations.

“The digital tax referred to in this agreement, which is also frequently debated globally, concerns the taxation of several hundred major technology companies, the majority of which are indeed from the US. This is limited to a few dozen companies, such as Google, Netflix, and so forth,” he explained.

PMSE VAT, by contrast, is a levy on transactions involving foreign digital products and services sold to consumers in Indonesia through electronic systems.

On that basis, Febrio assured that the agreement’s provisions have only a limited impact on Indonesia’s tax revenues.

According to the Finance Ministry’s latest records, total PMSE VAT remittances from 2020 to 2025 reached Rp34.54 trillion as of 30 November 2025, submitted by 215 PMSE entities out of 254 appointed companies.

PMSE VAT is one component of taxation from the digital economy sector, alongside cryptocurrency tax, fintech tax (P2P lending), and the Government Procurement Information System (SIPP) tax.

Total remittances from the digital economy sector reached Rp44.55 trillion up to 30 November 2025.