Indonesia to Continue Levying VAT on US Companies under Reciprocal Trade Agreement

Jakarta: The government has confirmed that the Agreement on Reciprocal Trade (ART) between Indonesia and the United States does not grant special treatment in the form of tax exemptions for American companies. The agreement instead emphasises the principles of fairness and equality within the national taxation system for all foreign trading partners.

“No. Indonesia will continue to levy Value Added Tax (VAT) on the activities of US companies,” affirmed Haryo Limanseto, Spokesperson for the Coordinating Ministry for Economic Affairs, in a written statement on Sunday, 22 February 2026.

The clarification addresses concerns regarding the potential loss of state revenue through VAT under the ART framework. The government is committed to continuing tax collection in accordance with prevailing domestic regulations without discriminating based on a company’s country of origin.

“This agreement stipulates that the imposition of VAT shall not be discriminatory towards US companies alone. The Indonesian government will continue to levy VAT on US companies provided the same provisions are applied equally to other countries,” said Haryo.

Through this non-discrimination clause, Indonesia is safeguarding the integrity of its tax sovereignty whilst ensuring a healthy and competitive investment climate. Accordingly, American companies will be treated on equal terms with companies from other nations that have already established trade cooperation with Indonesia.