No Solution yet to Google Tax Issues
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The Communications and Informatics Ministry said that it has not come up with the best solution in relation to the endeavor of collecting taxes from giant tech company Google, as the regulation on foreign app companies (over the top or OTT) has not been realized yet.
“No solution yet, and I’m still coordinating with the Finance Ministry. But I keep on pushing to have a playing field level between the national OTT and the International OTT,” Communications and Informatics Minister Rudiantara said in Jakarta on Friday, October 7, 2016.
Earlier, Rudiantara said that Google Indonesia was not running an advertising business. In addition, Google has not set up a permanent local entity (BUT) in Indonesia, making it difficult for the government to collect taxes from Google.
Rudiantara called on Google to show its good will to discuss the issue.
“However, the amount of taxes to be paid by Google remains Finance Ministry’s jurisdiction,” he said.
Rudiantara had also set a target to finalize regulations on OTT companies in the third quarter of 2016. However, the realization remains sluggish since the Ministry cannot issue a regulation that is not applicable and enforceable.
Google Singapore, as Google Indonesia’s holding company, refused to be audited by the Tax Directorate General, following a finding that Google gains income from Indonesia, although it has not yet established a permanent local entity in the country. The Tax DG found an indication of criminal offenses and conducted investigation into the company.
Finance Minister Sri Mulyani has not provided details about steps to be taken to collect taxes from Google. However, Sri said that the government would continue to demand Google to fulfill its tax obligations.
Questions & Answers
Q.Why has the Indonesian government struggled to collect taxes from Google?
Why has the Indonesian government struggled to collect taxes from Google?
The Communications and Informatics Ministry states that a regulation on foreign app companies has not been realised. Google has not established a permanent local entity in Indonesia, making tax collection difficult for the government.
Q.What is the Finance Ministry's role in this tax dispute?
What is the Finance Ministry's role in this tax dispute?
The amount of taxes Google should pay falls under the Finance Ministry's jurisdiction. The Finance Minister has stated that the government will continue to demand Google fulfil its tax obligations.
Q.What criminal allegations have been made against Google?
What criminal allegations have been made against Google?
The Tax Directorate General found an indication of criminal offences and is investigating Google. This followed Google Singapore refusing an audit, despite findings that Google gains income from Indonesia.