Google & Indonesia Fail to Reach Tax Agreement in 2016
US multinational technology company Google failed to reach a tax settlement with Indonesia's Tax Office in 2016 and therefore directors of Google Indonesia could risk a prison visit. In September 2016 Muhammad Hanif, Head of the Tax Office's Special Cases Department, said Google could face claims for five years of back taxes, including a bill of more than USD $418 million for full-year 2015 as the company is estimated to have paid less than 0.1 percent of the total income and value-added taxes it owed Indonesia in 2015. In Indonesia, Google generates income from online advertisement.
Google only has a representative office in Indonesia, while transactions and revenue (generated in Indonesia) are booked at Google Inc's Asia Pacific headquarters in Singapore. This means Indonesia misses out on significant tax revenue.
Hanif said Indonesian authorities will continue to investigate Google's (alleged) tax evasion in 2017 as both sides failed to reach a tax settlement so far.
Ken Dwijugiasteadi, Director General of Taxation at Indonesia Finance Ministry, said Google is treated "just like a local taxpayer". This would imply Google Indonesia's executives could face imprisonment if no deal is reached, and if the ongoing investigation confirms the existence of tax evasion. Indonesia's tax office can jail a taxpayer (or a company's directors, board members or shareholders) up to one year in case they owe back taxes of more than IDR 100 million (approx. USD $8,000).
Read more:
• Alphabet's Google & Indonesia to Reach Tax Settlement Soon
• Indonesia Wants Google to Set Up Local Company & Pay Tax
