By Grace D. Amianti
The country's tax authority expects US-based technology giant Google's Indonesian operation to provide supporting documents as the company has come under investigation due to its failure to pay tax arrears demanded by the government.
Jakarta’s special tax office head Muhammad Haniv said the tax authority was still waiting for the submission of reports from Google regarding its transactions in Indonesia as it operated many types of businesses in the country.
The company has previously submitted a financial report regarding the value of its business in Indonesia, but Haniv said the tax office could not base its investigation on that document alone.
“We're still waiting for supporting documents, which is important in an investigation because they have many sources of revenue, such as from pay-per-click and apps,” he said after a national meeting at the Finance Ministry on Tuesday.
The investigation came after a negotiation between the Directorate General of Taxation and Google stalled without reaching a settlement because of a lower tax rate requested by the technology behemoth compared to what the tax office projected the company had earned in the country.
The tax office asked Google to pay its due taxes with a 150 percent penalty. Should the company ignore the government’s request, the tax authority will carry out a full investigation with a 400 percent fine as stipulated in the General Taxation System (KUP) Law.
The tax office has estimated that Google owes about Rp 5 trillion (US$372 million) in back taxes and penalties. The government, desperate for new tax sources and a boost in state revenue, began negotiations a few months ago to find middle ground with the tech giant, only to end up in a deadlock.
Despite expecting a faster process, Haniv said there was no deadline for the company as it was a special investigation, which could last for a year based on experiences in other countries. (est)