Google may face huge Indonesian tax bill - Mobile World Live

Google may face huge Indonesian tax bill

20 SEP 2016

Indonesia’s tax office plans to investigate Google for not paying taxes on billions of dollars of advertising revenue over the past five years, with the unpaid tax amount possibly reaching more than $400 million for last year alone.

The tax office alleges that Google Indonesia paid less than 0.1 per cent of the total income and value-added taxes it owed last year, Reuters reported.

The investigation follows the search giant refusing to cooperate with the tax authorities after it requested to examine Google’s tax reports in April. The majority of its revenue generated in Indonesia is booked at its Asia Pacific headquarters in Singapore.

Finance Minister Mulyani Indrawati insisted the tech giant must comply with national tax regulations, the Jakarta Post said. Investigators visited Google’s local office on Monday.

Google Indonesia has stated it continues to cooperate with local officials and has paid all applicable taxes.

The move comes at a time when governments around the world are cracking down on tax avoidance schemes by multinational companies, such as Google, Apple and Starbucks. Muhammad Haniv, head of the tax office’s special cases branch, said it plans to probe other internet firms for back taxes.

If found guilty, Google would be required to pay fines of up to four times the amount it owed, bringing the total tax bill to IDR5.5 trillion ($418 million) for 2015, Haniv told Reuters. He didn’t provide an estimate for the five-year period.

Mulyani said all activities in Indonesia must have a permanent establishment, making their business activity subject to taxation, the Post reported. She acknowledged that online-based business transactions had long been a complicated issue for many countries, but emphasised that the government would continue to enforce the rules and regulations of the country.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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