google indonesia smartphone shop

A sticker reading ‘Review us on Google’ is pictured at a smartphone shop in Ambassador Mall in Jakarta. Pic: Reuters

Google and Indonesian government discuss tax deal worth US$73m

By | 29 November, 2016

GOOGLE, of Alphabet Inc., is said to be near settling a tax deal of around US$73 million with the Indonesian government.

If a settlement is made Google will not be fined and will pay no more 1 trillion rupiah in back taxes, a senior tax official told the Wall Street Journal.

The figure is far less than Indonesian tax authorities originally sought according to the tax official.

SEE ALSO: Google to reach tax settlement with Indonesian govt after back tax row

In September, the tax agency said U.S.-based Google owed up to five trillion rupiah in 2015 in taxes and fines. The figure is based on data from other government agencies about digital-ad revenue for the Indonesian market

In the past Google has said it has paid all applicable taxes in the country.

“Consider this a tax amnesty for Google,” Muhammad Haniv, head of the tax office’s special-cases unit, said in an interview with WSJ last week.

The government is looking to increase tax collection from multinational companies to fund its infrastructure program.

In April, the tax agency said it would investigate foreign internet companies, claiming they had been underpaying tax for years.

According to Bloomberg, Indonesia is sizing up Facebook as the next perpetrator on its tax list. Haniv told reporters last week that the social media giant owes Indonesia anywhere between two trillion rupiah (US$148 million) to three trillion rupiah in unpaid taxes.

Officials reportedly sent a letter to Facebook in Ireland to request a meeting regarding the issue. Yunita Purnamasari, a spokeswoman for Facebook in Jakarta, told Bloomberg that the company had no comment at that stage.

Google and Facebook collected 70 percent of Indonesia’s total digital advertising revenue last year of US$830 million, Indonesian tax officials say, although neither company has confirmed the figures.

In January, Google struck a tax deal with the UK agreeing to pay £130m (US$185 million) in back taxes and interest covering the years 2005 to 2015.



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@Heidivel

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Heidi Vella is a freelance energy and technology journalist based in London. Her interests include smart cities, clean energy, emerging markets and technology innovation. Prior to working freelance, Heidi spent four years’ covering all things technology and energy-related for London-based Progressive Digital Media.

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