Indonesia set to collect trillions of rupiah from Google

Quoting Jakarta Special Tax Office Head Muhammad Haniv, the republic's sole English daily, said the technology company had allegedly booked hefty revenue from Indonesian advertisers without paying proper taxes.

"If Google generates income from Indonesia, it has to pay taxes. It is immoral if Google refuses to do so," Muhammad Haniv was reported as saying.

The report said the firm could be subjected to fines of up to Rp5.5 trillion (RM1.5 billion) for 2015 alone.

Muhammad Haniv said the company was also suspected to have refused a state audit of its tax obligations which could lead to criminal charges under 2009 Tax Law if the investigators found sufficient evidence.

The agency investigators estimated that Google Asia Pacific’s total revenue from Indonesia last year accounted for more than RM1.8 billion.

The daily said the Indonesian tax authority had earlier confirmed that an independent Indonesian company, PT Google Indonesia, had been carrying out work under Google Asia Pacific’s instruction.

A contract between the two firms stipulated that the former received three per cent of the latter's revenue or reimbursement, said Muhammad Haniv.

It was reported that Indonesia has been struggling to find alternative sources of state revenue as it feels the pinch of the global economic slowdown and plunging energy prices.

The government’s ongoing tax amnesty programme, for example, is expected to help plug the widening state-budget deficit with tax-revenue realisation accounting for less than half of the 2016 target with less than four months left in the year.

On Friday, Finance Minister Sri Mulyani said Indonesia was committed to hunting down Google and its alike to force them to comply with local tax regulations.