Google in Indonesia investigated over $400m tax bill

Google might have to pay a tax bill of more than $400m (£306.4m) for 2015 to Indonesia if it is found that the internet search giant avoided tax payments in the country.

PT Google Indonesia paid less than 0.1% of its total income and value added taxes last year, tax authorities of the South East Asian country alleged.

The tax office is planning to pursue Google over five years of unpaid taxes. The office will summon directors from Google Indonesia who also hold positions at Google Asia Pacific.

If found guilty the American multinational technology company might have to pay fines up to 5.5 trillion rupiah ($418m) for 2015, which is close to four times the amount the company actually owed.

Google books most of its revenue that is generated in Indonesia at its Asia Pacific headquarters in Singapore.

Mohammad Hanif, the head of the special cases branch in the tax office told Reuters the investigators went to Google's local office in the country on 19 September.

Hanif said, "Google's argument is that they just did tax planning. 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."

Hanif had earlier told the news agency that Google refused to cooperate after it was sent a letter in April requesting to be allowed to examine the its tax reports. And, this is what has prompted the Indonesia tax office to escalate the case into a criminal one.

The tax office is also planning to chase back taxes from other companies that deliver content through the internet in Indonesia, such as Yahoo, Twitter and Facebook. The Indonesian government believes these tech firms owe billions of dollars of revenue they generate from the country.

The total advertising revenue for the industry is estimated at $830m a year, with Google and Facebook accounting around 70% of that, Hanif added.

In June Google's Madrid offices was raided by Spanish tax authorities as part of an investigation into company's tax payments. Prior to this Google's Paris headquarters were raided by French police in an investigation over tax evasion on 24 May. The French authorities believe Google owed €1.6bn (£1.2bn) in corporation tax and VAT combined.