Indonesia Investigates Internet Search Giant Over $400m Tax Bill

The Indonesian Tax office launched investigation on Google over suspicion of tax avoidance over last five years. If found guilty, Google would have to pay $400m (€358m) back in taxes with an $18 million fine.


The head of the special cases branch in the tax office, Mohammad Hanif, informed that Google refused to cooperate in June after tax office requested the company to examine its tax reports. That has prompted the Indonesia tax office to escalate the case into a criminal one. On September 19, investigators went directly to Google's local office as part of launched investigation.

Google's Tax Planning

Google books most of its revenue that is generated in Indonesia at its Asia Pacific headquarters located in Singapore. Hanif said, "Google's argument is that they just did tax planning. Tax planning is legal, but aggressive tax planning - to the extent that the country where the revenue is made does not get anything - is not legal."

As a response to the investigation, Google stated that “Google Indonesia has been incorporated as a local company in Indonesia since 2011. We have been and will continue to co-operate with the government and have paid all applicable taxes in Indonesia.” 

Investigation of Other Internet Companies

Local experts said that it normally takes at least three years for an Indonesian court to make a decision on a tax criminal case. Local authorities revealed that the tax office is also planning to chase back taxes from other companies that deliver content through the internet in Indonesia. The Indonesian government believes that these companies book their Indonesian profit in other countries.

Source: Reuters, Assia Nikkei, Financial Times, Business Insider

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