Indonesia probes Google over unpaid taxes

Indonesia is investigating Google over five years of unpaid taxes on advertising revenue that could lead to a bill of $400 million for last year alone.

(Next Media Online) – Indonesia believes Google paid just 0.1 percent of the taxes it owed last year by booking most of its Indonesian advertising revenue through its Singapore office, Reuters reported.

Google has previously been scrutinized by Australian authorities for paying tax in Singapore on advertising revenue generated in Australia, according to the Financial Times.

The corporate tax rate in Australia is 30 percent. The rate is 25 percent in Indonesia, and just 17 percent in Singapore.

Indonesia is also examining the tax reports of Yahoo, Twitter and Facebook, and in a separate development, is investigating the Ford Motor Company.

Indonesia claims Google allocated just 4 percent of the total revenue it generated in the country last year to its Indonesian branch.

The Indonesian communications ministry estimates that the digital advertising industry in the country was worth $800 million last year, and none of it was taxed.

Economic growth is slowing in Indonesia and the resource-rich country faces a revenue shortfall this year because of low commodity prices.

SOURCES: Reuters, Financial Times