To improve the collection of value-added tax ("VAT") from cross-border digital transactions, the Indonesian government has introduced Presidential Regulation No. 68 of 2025 ("Regulation"). The Regulation, which took effect on 5 June 2025, addresses the rise in cross-border digital transactions or Transaksi Digital Luar Negeri ("TDLN") that have often fallen outside the scope of taxation due to uncertainty in the applicable tax laws. Through this Regulation, the government aims to enhance revenue collection through a new, tech-based system tailored for VAT on cross-border digital services. This new system is called Tax Collection System on Cross-Border Digital Transactions or Sistem Pemungutan Pajak atas Transaksi Digital Luar Negeri ("SPP-TDLN").

What Does the Regulation Do?

The Regulation focuses on VAT collection for cross-border digital transactions. To support this, the government has introduced a technology-based system operated by a designated entity, PT Jalin Pembayaran Nusantara ("PT Jalin"), which will use specialised technology and a strong information database to help the government collect VAT from foreign digital services.

What Counts as a Cross-Border Digital Transaction (TDLN)?

Under the Regulation, TDLN refers specifically to digital transactions involving the use or exchange of services and/or information through computers, networks, or other electronic media. Transactions that do not involve such exchanges are not covered.

What Are the Objectives of SPP-TDLN Implementation?

The system aims to address the complexity of taxing cross-border digital transactions, which are often difficult to reach through conventional mechanism. It also seeks to improve fairness in tax collection, enhance compliance among digital business players, and ultimately optimise state revenue from the digital sector. 

Who's Running the System?

PT Jalin, a subsidiary of state-owned enterprises PT Danareksa (Persero) and PT Telekomunikasi Indonesia (Persero) Tbk, was selected based on its solid experience in financial and payment technologies, secure data-handling capacity, strong finances, and overall readiness to meet the Regulation's technical and institutional requirements.

In its role as the operator of the system, PT Jalin is expected to help increase state revenue by improving the effectiveness of VAT collection, particularly from cross-border digital services, using accurate and reliable data. Moreover, by leveraging an existing technology platform, PT Jalin is expected to ensure rapid deployment while maintaining the strict confidentiality of transaction data. Importantly, the appointment also allows the government to avoid additional investment in infrastructure.

What Are PT Jalin's Responsibilities as Operator?

As the appointed operator, PT Jalin is responsible for conducting a trial or sandboxing phase that includes both administrative and technical testing. Based on the results, it must ensure the reliability and sustainability of the system's technology. PT Jalin is also tasked with collecting VAT on cross-border digital transactions, maintaining system security—including the confidentiality, integrity, and availability of data and information—and providing support, maintenance, and funding for the system's implementation.

In addition, PT Jalin must coordinate with the team designated by the presidential decree (which is yet to be enacted) and operate in full compliance with prevailing laws and applicable procedures.

Once the system is in place, PT Jalin will receive remuneration determined by the Minister of Finance or other appointed authorities, calculated based on the amount of VAT successfully remitted to the state treasury.

Who Can PT Jalin Partner with to Run the System?

To support its operations, PT Jalin may appoint a partner (mitra). This partner can either be a local or foreign legal entity as long as it is capable of delivering the necessary infrastructure, data, and technology, particularly with cross-border capabilities. Any potential partner must undergo a sandboxing test, which includes both administrative and technical evaluations.

The administrative test assesses whether the partner has the operational, financial, and legal capacity to support VAT collection. This includes demonstrating experience in digital tax systems, maintaining a presence in Indonesia, employing qualified personnel with at least three years in digital tax collection, and having a clean compliance record (both locally and internationally). The partner must also be free from conflicts of interest and operate from a jurisdiction recognised by the Indonesian government.

The technical test focuses on the partner's ability to deliver a secure, scalable, and high-performing system. It must also demonstrate strong cybersecurity and data protection measures, and the ability to monitor and report test results effectively.

If necessary, PT Jalin may propose additional parameters for the sandboxing test to the coordination team. PT Jalin must also submit the test results to the coordination team for validation and recommendation. Ultimately, PT Jalin retains the authority to appoint its partner for implementing the system.

Key Takeaways

Indonesia's new regulation on VAT for cross-border digital transactions is changing how digital services are taxed. Businesses providing digital services with cross-border operations to Indonesian users are likely to be impacted. For these companies, they should review their compliance, data-handling and reporting capabilities, and prepare for potential engagement with the new system. Staying ahead of these changes will help avoid disruption and position businesses for smooth compliance.

Early engagement and system readiness can help reduce compliance risks and avoid potential sanctions. From a business perspective, the Regulation signals the government's increasing scrutiny of foreign digital transactions and demonstrates Indonesia's commitment to creating a level playing field between local and offshore service providers.