Daily Management Review

Sources say Tax Settlement with Indonesian Government to be done by Google: Reuters


11/23/2016




Sources say Tax Settlement with Indonesian Government to be done by Google: Reuters
Within the next few weeks, Alphabet Inc's Google is expected to reach a tax settlement with the Indonesian government, reports Reuters citing people familiar with the matter.
 
One of the people, who declined to be named as the information was not public, reportedly told the international news agency that Google will have to agree to a new calculation of profits made in the country apart from the search giant paying back taxes and fines under the proposed settlement with the government.
 
Analysts predict that more countries would be encouraged to aggressively pursue back taxes from internet companies like Google as the settlement, is achieved, would pave the way for the same.
 
A tax office spokesman declined to comment. A Google spokesman also declined to comment, reported Reuters.
 
According to the Indonesian tax office, the Asia Pacific headquarters in Singapore of Google is the place where most of the revenue generated by Google is booked.
 
Google would be potentially liable to face a bill of more than $400 million for 2015 alone if it were found to have avoided payments as the Indonesia planned to pursue Google for five years of back taxes, a senior tax official had said in September.
 
"I think other countries that have a significant population will also try to chase Google for taxes," said Yustinus Prastowo, executive director of the Center for Indonesia Taxation Analysis.
 
Indonesia is eager to ramp up its tax collection to narrow its budget deficit and fund an ambitious infrastructure program that it has undertaken and for this purpose the government had launched a tax amnesty scheme in July to lure back billions of dollars stashed abroad.
 
The country is among the world's biggest users of social media like Facebook and Twitter and with a population of of 250 million people has a youthful demographic.
 
People familiar with the matter reportedly told Reuters that to negotiate its tax bill, senior executives from Google's Asia Pacific headquarters had met with Indonesian tax officials several times over the last few months.
 
Earlier last year, Britain's tax authority had challenged Google’s low tax returns for the years since 2005 and following this challenge, in January the company was forced to agree to pay 130 million pounds ($185 million) in back taxes to settle the British probe.
 
Many of the other governments around the world see this tendency of large global corporate as egregious corporate tax avoidance and are also seeking to clamp down on such tendencies.
 
For example, Reuters had reported in September that the head of Thailand’s revenue department had told the news agency that the country is studying plans to toughen tax collection rules for internet and technology firms.
 
Including the planned introduction of a UK-style diverted profits tax, Australia announced a further crackdown on multinational tax avoidance in its annual budget in May.
 
(Source:www.reuters.com) 






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