Indonesia says Google tax settlement offer too small, no deal this year

[JAKARTA] An offer by Google to settle a tax dispute with the Indonesian government was too small and a deal will not be reached this year, the head of the tax office's special cases branch said.

Indonesia has accused Alphabet Inc's Google of paying insufficient tax, saying that much of the revenue generated by Google in the country is booked at its Asia Pacific headquarters in Singapore.

Although hopes for an imminent settlement had been high last month, talks had become deadlocked over the amount to be paid, Muhammad Haniv, who is also the main investigator in the case, told Reuters.

"Because we couldn't reach a settlement, the investigation continues. Now we want Google to open its books and the tax office will calculate the tax owed," he said, adding that Google had asked for more time to prepare its accounts.

Google declined to respond to Mr Haniv's comments. It repeated a previous statement that it has had a local company in Indonesia since 2011, has paid all applicable taxes and will cooperate fully with the government.

Indonesia is eager to ramp up tax collection to reduce its budget deficit and fund infrastructure programmes.

It said in April it would check if taxes paid by the local offices of Google, Yahoo, Twitter and Facebook were sufficient.

According to Indonesian law, if Google accepted the tax office's findings, it would not be taken to a court but would have to pay the taxes owed plus a fine equivalent to 150 per cent the amount.

If Google disputed the findings and was taken to court, it could be fined up to four times the amount it owed if it lost the case.

REUTERS