Surround with html tag, indentation is off

BUG REPORT

What happened:

For example we have:

    <div>
        <div class="navigation">
            <div class='container'>
                <a href="/" class="logo" title="Home" style="position: absolute;">
                    <img src="/images/logo.png">
                    <div class="beta-ribbon">
                        <div class="beta-ribbon-content">BETA</div>
                    </div>
                </a>
        </div>
   </div>

I select with V

                <a href="/" class="logo" title="Home" style="position: absolute;">
                    <img src="/images/logo.png">
                    <div class="beta-ribbon">
                        <div class="beta-ribbon-content">BETA</div>
                    </div>
                </a>

and type S<div>

I got

    <div>
        <div class="navigation">
            <div class='container'>
<div>
                <a href="/" class="logo" title="Home" style="position: absolute;">
                    <img src="/images/logo.png">
                    <div class="beta-ribbon">
                        <div class="beta-ribbon-content">BETA</div>
                    </div>
                </a>
</div>
        </div>
    </div>

What did you expect to happen:

I tried the same thing in native vim and I got:

    <div>
        <div class="navigation">
            <div class='container'>
                <div>
                    <a href="/" class="logo" title="Home" style="position: absolute;">
                        <img src="/images/logo.png">
                        <div class="beta-ribbon">
                            <div class="beta-ribbon-content">BETA</div>
                        </div>
                    </a>
                </div>
            </div>
        </div>
    </div>

Reproduce the reported Visual Studio Code Vim visual-selection workflow with an HTML snippet and compare its indentation with native Vim. Trace the surround-with-tag behavior and verify that the inserted tag and selected lines are indented one level deeper, matching the expected example.