Govt to collect taxes from Google this year

Director General of Taxes of the Ministry of Finance Ken Dwijugiasteadi said the government will collect taxes from Google this year, after completing its inspection of the United States multinational companys financial statements.

“It should be collected starting from this year. It should be carried out after finishing the examination,” Ken said on the sidelines of the 10th National Leadership Meeting of the Taxation Directorate General of the Ministry of Finance on Monday.

The process includes a discussion of the final results of the examination or closing conference. The two sides will make a statement about the amount of taxes Google should pay to the government.

The Tax Directorate General has monitored the taxes of Google, Twitter, Facebook or Yahoo since April 2016 to explore potential receipts from the information technology businesses, which have been growing rapidly.

According to the Directorate General of Taxation, Google in Indonesia has been registered as a legal entity in the country in the Tanah Abang III Tax Service Office (KPP) with a foreign investment company (PMA) status since 15 September 2011, and is a dependent agent of Google Asia Pacific Pte Ltd. in Singapore.

Accordingly, pursuant to Article (2) paragraph (5) letter (N) of the Income Tax Law, Google should have been included as a BUT (permanent establishment) company whose income from Indonesia is subject to tax.

However, Google has refused any tax audits by the Indonesian tax authorities and rejected to be included as a company with the BUT status, though Googles revenues from Indonesia reach trillions of rupiah, primarily from advertising.

Last September, The Communication and Informatics Ministry urged Google to pay tax in Indonesia and set up a permanent establishment just as the US-based technology provider has done in several other countries.

“We have told Google to apply the same norms in Indonesia (as it did in India or Brazil). Googles revenues from Indonesia and advertisements targeted at Indonesia are taxable. Google is expected to set up a permanent establishment in Indonesia,” Noor Iza Noor, acting head of the ministrys public relations department, said according to the ministrys website.

Google leaders consider Indonesia important for the company, just as India and Brazil are; so Google should apply the same principles in terms of transactions and taxes, he added.

He noted that Google has had a permanent establishment in India and paid taxes which are quite high.

“We hope Google will be wise in business and will apply the principle of equality. Transactions should not be pooled only in certain countries, while disadvantaging other countries that spend on Google,” he argued.

Digital ads spending in Indonesia in 2016 is estimated to increase significantly to more than US$1 billion.

The Tax Directorate General of the Indonesian Finance Ministry has asked Google to pay taxes in the country.

Google has refused to be inspected and also to be considered as a business entity subject to taxes.

“We will take a harsher measure,” Muhammad Haniv, head of the Jakarta Tax Office, noted in a press conference.

Source: Antara News