<![CDATA[The development of electronic commerce (e-commerce) has transformed people's economic transaction patterns and significantly contributed to the growth of the digital economy in Indonesia. On the other hand, this development poses challenges for the government in optimizing state revenue through the tax system, particularly Value Added Tax (VAT). This study aims to analyze the application of VAT to electronic commerce transactions, identify the resulting benefits, and examine the various obstacles encountered in its implementation. The study uses a qualitative approach with a descriptive research type. The data used are secondary data obtained through a literature review, including laws and regulations, books, scientific journals, reports from the Directorate General of Taxes, publications from the Ministry of Finance, and various official documents related to taxation and digital commerce. Data analysis was conducted qualitatively through the stages of data reduction, data presentation, and drawing conclusions. The results show that the application of VAT to e-commerce transactions has increased the effectiveness of tax administration through a digital platform-based collection mechanism, expanded the tax base, improved tax implementation, and made a positive contribution to state revenue. In addition, this policy is able to create fairer tax treatment between conventional and digital businesses. However, its implementation still faces several challenges, including low tax understanding among some business actors, the complexity of cross-border digital transactions, the rapid development of digital business models, and limited data integration within the tax oversight system. Therefore, regulatory improvements, strengthening of digital-based tax administration systems, increasing tax literacy, and optimizing the use of information technology are needed to support the effectiveness of VAT implementation in the digital economy era.]]>
