Earlier we reported that Google has failed to pay the tax in Pakistan. But now, reports are coming that the company is being alleged for tax evasion in Indonesia as well. According to the details, Indonesia has decided to pursue Alphabet Inc.’s Google for five years of back taxes. According to a senior Indonesian tax official, the company could face a bill of more than $400 million for 2015 alone, if it is found to have avoided payments.
According to a report by Reuters, the tax office says that PT Google Indonesia paid less than 0.1 percent of the total revenue and value-added taxes it owed in 2015. Interestingly, Google Indonesia has denied the statement of the tax office and says it has paid all the applicable taxes.
Muhammad Haniv, head of the tax office’s special cases branch, told Reuters that the tax office has decided to pursue other internet companies for back taxes. If found guilty, the search giant may have to pay the fines of up to four times the amount it owed, bringing the maximum tax bill to $418 million for the last year. He declined to provide an estimate for the five-year period.
Most of its income generated in Indonesia is booked at company’s Asia-Pacific headquarters in Singapore. Google Asia Pacific declined to be audited in June, prompting the tax office to escalate the case into a criminal one.
“Google’s argument is that they just did tax planning,” Haniv said. “Tax planning is legal, but aggressive tax planning – to the extent that the country where the revenue is made does not get anything – is not legal.”
The tax office will summon directors from Google Indonesia who also hold positions at Google Asia Pacific, Haniv said, adding that it is working with the Indonesian police. Globally, it is not very common for a state investigation of corporate tax structures to be escalated into a criminal case.