Sunday, 25th June 2017

Government reaches tax agreement with Google

13th June 2017 | 7.939 Views
Government reaches tax agreement with Google
Illustration. Logo at Google Indonesia office, Jakarta. (ANTARA News/Natisha)
Jakarta (ANTARA News) - Finance Minister Sri Mulyani Indrawati confirmed that the government had reached an agreement on tax settlement with the search engine giant Google.

"We have discussed with them and have reached an agreement based on the annual tax notification (SPT) 2016," Indrawati said here, Tuesday.

The minister noted that Google had upheld its commitment to pay taxes under the agreement. However, she refused to elaborate on the amount of the tax.

"Since this is confidential, we cannot disclose a companys taxes," she added.

It was earlier reported that Google had failed to pay proper tax on ground that the company did not have a representative office in Indonesia.

The Directorate General of Taxes had conducted an audit and urged Google to submit its financial report to enable the authority to calculate its tax obligation based on the firms income.

The countrys tax authority has monitored Google since April 2016, as the information technology business has grown rapidly and earned high revenue from advertisers.

The government has estimated that the total advertising revenue for the industry in Indonesia reached around US$830 million, with Google and Facebook Inc accounting for around 70 percent of this figure.

Google had registered as a foreign investor in Indonesia since September 15, 2011, and served as a dependent agent of Google Asia Pacific Pte Ltd in Singapore.

Hence, under the law on income tax, the firm, as a permanent establishment, is liable to pay income tax.

The government has claimed that Google owes Rp5 trillion ($373.8 million) in back taxes and penalties since 2011, and the tax office estimates that its revenues had reached Rp6 trillion in 2015.

Last year, Google had agreed to pay 130 million pounds ($164 million) in back taxes to settle a probe by Britains tax authority, while Thailand is studying plans to toughen tax collection rules for internet and technology firms.(*)