On June 13, Indonesian Finance Minister Sri Mulyani Indrawati informed that Indonesia has reached a tax settlement with Alphabet Inc's Google for 2016. This follows an ongoing dispute over allegations that Google avoided paying tax for its advertisement activities.
Google had registered as a foreign investor in Indonesia in 2011. The permanent establishment served as a dependent agent of Google Asia Pacific Pte Ltd in Singapore. After conducting an audit, the Directorate General of Taxes urged Google to submit its financial report to enable the authority to calculate its tax obligation based on the firms income. The government has claimed that Google owes Rp5 trillion ($373.8 million) in back taxes and penalties since 2011.
The government estimated that the total revenue for the advertising industry in Indonesia reached around US$830 million. Google and Facebook Inc account for around 70 percent of this figure, according to media reports.
The Finance Minister informed that the government have discussed the issue with Google and have reached an agreement based on the annual tax notification (SPT) 2016. According to Reuters, senior executives from Google's Asia Pacific headquarters also met Indonesian tax officials in October to discuss its tax bill. The minister also informed that Google had upheld its commitment to pay taxes under the agreement, but could not specify the amount of the tax, since it is confidential.
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