On 5 June 2025, the Indonesian government issued President Regulation No. 68 of 2025 on Tax Collection System for Foreign Digital Transactions (“Regulation 68”). Regulation 68 regulates on a new system to collect value added tax (“VAT”) on foreign digital transactions.

Due to the complexity of cross-border digital transactions, an efficient, effective and accountable system is necessary for the tax collection. Therefore, the Indonesian government introduces Tax Collection System for Foreign Digital Transactions (Sistem Pemungutan Pajak atas transaksi Digital Luar Negeri /“SPP-TDLN”) to collect VAT on cross-border digital transactions.

We outline below the key points of Regulation 68.

SPP-TDLN Operator

The government appoints PT Jalin Pembayaran Nusantara (“PT Jalin”) as the operator of SPP-TDLN. PT Jalin is a subsidiary of PT Danareksa (Persero), which is a state-owned enterprise. The appointment is based on PT Jalin’s skills and experience in financial services and payment systems technology. Further, the government is of the view that PT Jalin has the financial capacity and capability to maintain secrecy of the data recorded in SPP-TDLN.

Responsibilities of SPP-TDLN Operator

As the operator of SPP-TDLN, PT Jalin’s responsibilities are as follows:

1.      conducting sandboxing, including administrative requirements and technical testing

2.      ensuring system reliability based on sandboxing result

3.      collecting tax on cross-border digital transactions

4.      ensuring the system’s safety and security, including protection of the data

5.      providing support, maintenance and funding to operate SPP-TDLN

6.      coordinating with the coordination team

7.      complying with the prevailing regulations and standard operating procedures

Appointment of Partners

PT Jalin is authorized to appoint partners in carrying out its responsibilities. The partners must be legal entities, either Indonesian or non-Indonesian entities. Further, the partners must have the capacity to meet the data, information and technology requirements, particularly with cross-border reach.

Before appointment, a prospective partner must go through a sandboxing process, covering both administrative review and technical testing. The requirements include, among others, as follows:

·       Having a global business and has a representative office in Indonesia.

·       Having experience in implementing tax collection system for digital transactions in at least one country

·       Employing an expert with a minimum of three years' experience in digital tax collection

Key Takeaways

The introduction of SPP-TDLN under Regulation 68 is expected to increase tax revenue from cross-border digital transactions. Further, it may also help streamline compliance process for foreign entities appointed as VAT collectors for digital transactions. However, Regulation 68 does not give details on the implementation of the system itself. Further, there is no detail yet about the timeline to implement the system. It is recommended for businesses conducting cross-border digital transactions, especially those appointed as VAT collectors, to prepare for the implementation of this new system in the future. Early preparation may help a smooth transition once the system is implemented.