The Indonesian government and Google have finally resolved its long-running dispute over allegations that the US technology colossus had avoided paying millions of dollars in taxes. Indonesia’s Finance Minister, Sri Mulyani Indrawati has confirmed that an agreement has been brokered, but revealed that the figure agree will not be disclosed. The Indonesian Finance Minister said: “We already have an agreement with them based on the 2016 annual tax return form, but we can’t disclose the figure.”
In September 2016, Indonesia’s tax office announced it would lead an investigation into Google after it alleged that the company, which is headquartered in California, had not paid tax on millions of dollars in advertising revenue over a five year period. It was claimed that Google Indonesia paid less than 0.1% of the total income and value-added tax it owed in 2015. The Directorate General of Taxation estimated that Google’s revenue reached IDR6 trillion in 2015.
However, the tax authority said that Google owed IDR around $376 million dollars in back taxes and additional penalties. This claim was vehemently refuted by Google’s management in Indonesia. Indonesia’s government who had expressed its desire to find new tax sources in a bid to boost state revenue entered negotiations with Google executives in early 2017, but talks stalled at an early stage.
In February the tax authority then threatened Google with legal action for its failure to provide them with transaction date they requested for the tax investigation. Google has been embroiled in similar tax controversies in other locations all over the world. However, the long-running saga has now been resolved, but the figure will not be disclosed. Thailand’s Finance Ministry disclosed that it will now reexamine its tax rules for internet and technology companies such as Google following the aftermath of what happened in Indonesia.
