Google faces tax probe in Indonesia

Google faces tax probe in Indonesia
Google faces tax probe in Indonesia

21 September, 2016

The biggest search engine "Google" has been drown on backfoot after the officials of the Indonesia Tax Department announced that they Google might have to pay the huge amount of $400 million for 2015 if it will be found guilty of avoiding the taxes.

The tax office believes that Google Indonesia paid less than 0.1 per cent of the total income and value-added taxes it owed a year ago.

The tax office is planning to pursue Google over five years of unpaid taxes.

Google's Indonesian entity reportedly allocates four percent of their total revenue as generated from the country.

Meanwhile, the Google Indonesia responded to it and told media side that " we will cooperate with the inquiry of Tax department but we would like to make clear one thing, we have paid all the taxes. Now the company is facing a fine that is equivalent to four times the taxes it should have paid previous year, which amounts to $418 million.

Yahoo and Google have formed Indonesian limited liability companies, while Twitter and Facebook operate branches of their Asia-Pacific offices in Indonesia.

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Authorities in Indonesia are pushing for the recovery of taxes from Google, the largest operating unit of Alphabet Inc. He indicated that this development had prompted the tax office to turn the issue into a criminal case. "Tax planning is authorized, but competitive tax planning - to the extent the state where the revenue is made does not get anything - is just not lawful".

The Indonesian government is also planning to go after back taxes from other companies in the industry, and planning new regulation to ensure they are subject to taxation, Hanif added. However, Singapore's corporate tax rate is 17 per cent compared with 25 per cent in Indonesia.

On the other hand, Google believes that it has paid all taxes owed.

Indonesia's Internet economy is expected to be worth $81 billion in 10 years, according to the e-conomy SEA 2016 report revealed in May by Google and Singapore's sovereign wealth fund Tamsek Holdings.

The fine is more than the £135 million in back taxes Google has agreed to pay after an "open audit" of its accounts by the United Kingdom tax authorities, in January this year.

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