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September 15, 2016

Indonesia Opening Investigation Into Google for Allegedly Unpaid Taxes

Google Headquarters
Photo Credit: brionv via flickr

Indonesia is accusing Google of failing to pay all of the tax it owes on billions of dollars of advertising profits.

The country’s  tax department said today that it will  launch an investigation this fall into Google after the U.S. firm reportedly refused to co-operate with tax officials. Indonesian tax specialist Muhammad Hanif told reporters today that Google has refused to cooperate, despite being sent a letter in April asking the company to hand over its tax reports.

Google is denying all accusations of wrong doing.

“We continue to cooperate fully with local authorities and pay all applicable taxes,” a Google Indonesia spokesman told Reuters.

Hanif, however,  said Google’s Indonesian entity was allocated roughly four percent of the total revenues made in Indonesia. It was that small amount that was taxed, which Hanif said was “unfair.”

Google is not the only U.S. company to be in Indonesia’s crosshairs, however. The country’s tax office has also asked Facebook, Twitter and Yahoo for their tax reports. The difference between these requests and the earlier one, is all three tech firms have compiled.

Like Google, Yahoo is an limited liability company while Twitter and Facebook simply have branches in Indonesia. The three companies, according to the government, also owe on billions of dollars of advertising profits.

The government believes these companies owe income and value added tax on billions of dollars of revenue they generate from advertising in Indonesia, the tax office said.