Google’s tax deal with Indonesia role model for SE Asia

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Google through its Asia Pacific headquarters agreed on future tax payments in Indonesia, a move seen as the beginning of a shake-up in how technology firms operate in the country and a role model for other Southeast Asian nations to collect taxes from e-commerce operations.

Google has been locked in a months-long dispute over allegations by Indonesia’s government that the search giant had not made enough annual payments. Finance Minister Mulyani Indrawati said on June 13 that Indonesia had now reached a tax deal with Google for 2016 but declined to disclose the settlement sum.

The agreement could not only be an indication of how Indonesia”s government may pursue other technology companies such as Facebook and Twitter for taxes, but could also inspire other countries in the region to do the same.

Tax officials all over the region allege that most of Google’s revenue generated in Southeast Asia is booked at its Asia Pacific headquarters in tax-friendly Singapore and local entities act as a sales service provider although the bussines is factually done in the respective countries.

In Indonesia, Google’s local Indonesian entity will now receive the revenue and pay expenses for its business in the country, Analysts say that countries with heavy online usage such as Thailand, Malaysia, Vietnam and the Philippines could follow suit.

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Google through its Asia Pacific headquarters agreed on future tax payments in Indonesia, a move seen as the beginning of a shake-up in how technology firms operate in the country and a role model for other Southeast Asian nations to collect taxes from e-commerce operations. Google has been locked in a months-long dispute over allegations by Indonesia's government that the search giant had not made enough annual payments. Finance Minister Mulyani Indrawati said on June 13 that Indonesia had now reached a tax deal with Google for 2016 but declined to disclose the settlement sum. The agreement could not only...

Reading Time: 1 minute

Google through its Asia Pacific headquarters agreed on future tax payments in Indonesia, a move seen as the beginning of a shake-up in how technology firms operate in the country and a role model for other Southeast Asian nations to collect taxes from e-commerce operations.

Google has been locked in a months-long dispute over allegations by Indonesia’s government that the search giant had not made enough annual payments. Finance Minister Mulyani Indrawati said on June 13 that Indonesia had now reached a tax deal with Google for 2016 but declined to disclose the settlement sum.

The agreement could not only be an indication of how Indonesia”s government may pursue other technology companies such as Facebook and Twitter for taxes, but could also inspire other countries in the region to do the same.

Tax officials all over the region allege that most of Google’s revenue generated in Southeast Asia is booked at its Asia Pacific headquarters in tax-friendly Singapore and local entities act as a sales service provider although the bussines is factually done in the respective countries.

In Indonesia, Google’s local Indonesian entity will now receive the revenue and pay expenses for its business in the country, Analysts say that countries with heavy online usage such as Thailand, Malaysia, Vietnam and the Philippines could follow suit.

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