Digital transactions rapidly dominate the trading system in the current era by providing quick and real-time fulfillment of life needs, including logistical needs, availability of public services, entertainment, and others. Moreover, the high number of digital transactions show prospects of potential tax extensification, mainly through the collection of Value Added Tax (VAT). Besides paying attention to the concept of consumption-based taxation in its collection, taxes on digital transactions can also increase state revenue as a source of income. The government needs to implement a policy strategy to optimize digital transactions' taxation through the VAT policy on Trade Through Electronic System. In a trade transaction, the consumer is the party that uses the goods and/or services obtained. Consumption of goods and/or services is subject to VAT. Regardless of the products' origin, VAT will be imposed because the goods and/or services are consumed within the customs area, including those imported from outside the customs area. This research discusses taxing digital transactions, a policy strategy for tax authorities through VAT of Trade Through Electronic System. This study aims to analyze the government's implementation strategy and compare VAT policy, especially on foreign e-commerce transactions of Digital Goods and Services in ASEAN countries. The qualitative approach is used as a research method, using an in-depth interview and literature study as data collection techniques. According to the equality principle, the policy formulation is based on the government's attempt to collect VAT on goods and/or services from overseas as one of the principles of tax collection and neutrality as VAT's main characteristics. Taxing digital transactions is also following the destination principle and is based on the principle of revenue productivity in taxation. Furthermore, the government's implementation strategy is to conduct dissemination and organize a decent implementation framework, both from the technology and business point of view. © 2020 IEEE.