Indonesia to Bill Google For Back Taxes, Fines
20 September 2016 - 1:40AM
Dow Jones News
JAKARTA, Indonesia—Indonesia's tax agency plans to bill Alphabet
Inc.'s Google unit for up to $380 million in back taxes and fines
that the search giant allegedly owes from 2015.
Muhammad Haniv, head of the tax office's special cases unit,
said in an interview that a team of four tax investigators met with
Google's Indonesian unit Monday, the latest escalation in a growing
dispute between government and the technology firm. He said they
discussed the alleged back taxes and audit of the unit's tax
compliance records.
"If we take this case to court, Google could be fined four times
the tax it owes us," Mr. Haniv said. He added that Indonesia will
also pursue taxes from as far back as 2011, when Google first
established a presence in the country. "Now we are still
investigating them," he said.
A Google spokesman confirmed the meeting and said that the
company "has been and will continue to cooperate with the
government and (has) paid all applicable taxes in Indonesia."
Mr. Haniv said Indonesian tax authorities believe that Google's
regional headquarters in Singapore, Google Asia Pacific Pte. Ltd.,
owes about $76 million in income and value-added taxes on the
profit it earned from Indonesian advertisers last year. In an
interview, Mr. Haniv said investigators estimated that Google Asia
Pacific's total revenue from Indonesia last year reached up to $455
million, generating some $152 million in profit.
Tax authorities say that Google Indonesia operates only as what
it describes as an event organizer for the Singapore operation,
Google Asia Pacific. The Singapore unit handles all the contracts
from Indonesian advertisers and pays all of Google Indonesia's
expenses, adding an additional 8% that is booked as the Indonesian
business's profit, Mr. Haniv said.
Mr. Haniv said this amount is tiny compared with the revenue
generated by Google Asia Pacific from advertisers, and said this
practice is "unfair and against the law."
"We will move forward with the investigation," Mr. Haniv said.
"We are not willing to let them drain our (digital advertising)
income but pay on a little tax."
Google declined to comment on Mr. Haniv's specific
allegations.
Tax authorities said that last year Google and Facebook
collected 70% of Indonesia's total digital advertising revenue of
$830 million, and the government has been pressing for more tax
revenue from the business for several months. Indonesia is
struggling to meet its tax collection target of $117 billion this
year to fund President Joko Widodo's plans to modernize and expand
the country's infrastructure. An amnesty program introduced earlier
this year has gotten off to a slow start, raising $1.73 billion of
its $12.5 billion target as of Sept. 16.
Indonesia's move also comes amid growing scrutiny into the tax
affairs of big-name tech firms. In late August, the European
Union's antitrust regulator demanded that Ireland recoup roughly
$14.5 billion of unpaid taxes accumulated over more than a decade
by Apple Inc., saying that rules prohibit government from helping
companies gain advantages over their competitors.
Mr. Haniv said that Indonesia's tax investigators will next
examine Facebook's tax records.
Write to Resty Woro Yuniar at restyworo.yuniar@wsj.com
(END) Dow Jones Newswires
September 19, 2016 11:25 ET (15:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Apr 2024 to May 2024
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From May 2023 to May 2024