Google execs negotiate with Indonesia govt on tax bill: source

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JAKARTA (Reuters) – Senior executives from the Asia Pacific headquarters of Google met Indonesian tax officials on Wednesday to negotiate the internet search company’s tax bill, a person with knowledge of the matter told Reuters.

No agreement has been reached yet, said the person, who declined to be named as the information was confidential.

A Google spokesman declined to comment.

Indonesia plans to pursue Google for five years of back taxes, and the US company could face a bill of more than $400 million for 2015 alone if it is found to have avoided payments, senior tax official Muhammad Haniv told Reuters last month.

Google Indonesia has said it continues to cooperate with local authorities and has paid all applicable taxes.

Indonesia is eager to ramp up tax collection to reduce its budget deficit and fund an infrastructure program. Other governments around the world are also seeking to clamp down on corporate tax avoidance.

Thailand is studying plans to toughen tax collection rules for internet and technology firms, the head of the Revenue Department told Reuters last month.

Ken Dwijugiasteadi, Indonesia’s director-general of taxes, declined to comment on whether the meeting with Google took place on Wednesday, but told Reuters in a text message: “When the time is right, we will hold a press conference.”

The tax office alleges that Google’s local entity, PT Google Indonesia, paid less than 0.1% of the total income and value-added taxes it owed last year, with most of the revenue from the country being booked at Google’s Asia Pacific headquarters in Singapore.

The Indonesian tax office has estimated the total advertising revenue for the industry in Indonesia at around $830 million a year, with Google and Facebook accounting for around 70% of that.

But a joint study by Google and Singapore state investor Temasek released earlier this year estimated this at $300 million for 2015.

(Reporting by Gayatri Suroyo and Eveline Danubrata in Jakarta; Additional reporting by Hidayat Setiaji; Editing by Bill Tarrant and Jane Merriman)

 

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2 Comments

  1. What is this “estimated” crap! You telling me Google can read my mail, comprehend what it means, can then propose products and services associated with my mail, and follow me around the web, across all my devices, but can’t tell what revenue it booked in each country down to $0.0001? I’m just going to call BS on that!

    Now if the government hasn’t got rules in place to tax the internet and prevent revenue flight and tax avoidance, that’s a story for another day!

  2. Jo Zeff, your last comment is the most accurate. The government here in Indonesia does not have rules dealing with this and if they do they dont know how to enforce them. This is one of the most difficult countries ever to PAY tax, take it from a tax payer and business operator. In previous years it was simple as one just had to “negotiate” with the nice officer from tax office as to how much you each thought as reasonable and then split it three ways (only some of that going to the government purse). Things are more complicated now with huge anti corruption drives from the Palace and a lack of skill in the tax office generally. So yes I do believe Google cannot work this out as nobody else in Indonesia can either. IN time yes, now, no.

What do you think?