“Google’s argument is they merely did tax preparation”, Hanif said.
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Several so-called tax rulings that the company, formerly known as GDF Suez, received from Luxembourg may have given it “an unfair advantage over other companies, in breach of EU state aid rules”, the European Commission said on Monday.
The tax office alleges PT Google Indonesia paid less than 0.1 percent of the total income and value-added taxes it owed past year. In an interview, Mr. Haniv said investigators estimated that Google Asia Pacific’s total revenue from Indonesia past year reached up to $455 million, generating some $152 million in profit.
Indonesia has launched an investigation into Google, following allegations that the company refused to cooperate with tax officials.
Muhammad Hanif, head of the special cases division of the tax office, told Reuters its investigators went to the local office in Indonesia of Google on Monday.
“We continue to cooperate fully with local authorities and pay all applicable taxes”.
Yahoo and Google have Indonesian limited liability corporations while Twitter and Facebook operate branches with their Asia-Pacific offices in Indonesia.
Google declined to comment on the reports, according to Reuters.
As in Europe, where competition commissioner, Margrethe Vestager, wanted a high-profile scalp to accelerate a broad campaign against corporate tax avoidance, and chose Apple as prominent low hanging fruit (sorry), the Indonesian tax office is planning to follow through and gather avoided taxes from other “over-the-top” service providers.
The tax office will summon directors from Google Indonesia who also hold positions at Google Asia Pacific, Hanif said, adding that it is working with the Indonesian police. The Indonesian government believes these tech firms owe billions of dollars of revenue they generate from the country.
The Brussels-based watchdog said it will investigate whether Luxembourg tax authorities selectively deviated from provisions of national law in rulings given to the company.
Google manages most of its Indonesian revenue through a different subsidiary, according to reports.
The communications ministry had estimated the value of digital advertising in Indonesia at about $800m in 2015.
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Indonesia is facing a sizeable revenue shortfall this year as the resource-rich country can no longer rely on commodity-related income.
