Ministry Asks Google to Set Up Permanent Establishment and Pay Tax

"We have told Google to apply the same norms in Indonesia (as it did in India or Brazil). Googles revenues from Indonesia and advertisements targeted at Indonesia are taxable. Google is expected to set up a permanent establishment in Indonesia," Noor Iza Noor, acting head of the ministrys public relations department, said, as per the ministrys website, Friday.

Google leaders consider Indonesia important for the company, just as India and Brazil are, so Google should apply the same principles in terms of transactions and tax, he added.

He noted that Google has had a permanent establishment in India and paid tax which is quite high.

"We hope Google will be wise in business and will apply the principle of equality. Transactions should not be pooled only in certain countries, while disadvantaging other countries that spend on Google," he argued.

Digital ads spending in Indonesia in 2016 is estimated to increase significantly to more than US$1 billion.

The Tax Directorate General of the Indonesian Finance Ministry has asked Google to pay tax in the country.

Google has refused to be inspected, and also to be considered as a business entity subject to tax.

"We will take a harsher measure," Muhammad Haniv, head of the Jakarta Tax Office, noted in a press conference on Thursday.

He said talks did take place with representatives of Google Asia Pacific Pte Ltd located in Singapore, but failed because they rejected being subjected to taxation.

"We will try to carry out negotiations to persuade them to pay taxes, particularly as per norms of fairness, because this approach worked in Britain," he added.(WDY)