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Indonesia inspects Yahoo, Google, Facebook, Twitter on back taxes

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by April 7, 2016 General

The directorate general of taxation will inspect the local offices of international technology giants Yahoo, Google, Twitter and Facebook on account of alleged unpaid taxes.

Finance Minister Bambang Brodjonegoro said evidences showed that the four companies should have established permanent establishments in Indonesia, but opted against doing so to avoid taxes.

A permanent establishment is a fixed place of business that is used by an individual or company which generally gives rise to income or value-added tax liability. Most multinational corporations choose to open representative office in other countries to enjoy lower taxes.

“The tax office will look into the back taxes of their business units. The companies earn income from Indonesia from advertising services, but listed them as the income of their Southeast Asia headquarters in Singapore,” Bambang said in a press conference in Jakarta on Wednesday.

Since July 2009, PT Yahoo Indonesia has acted as a dependent agent of the Singapore-based Yahoo Singapore Pte Ltd. Likewise, PT Google Indonesia, which has been registered in Indonesia since September 2011, acts as a dependent agent of Google Asia Pacific Pte Ltd.

Meanwhile, social media companies Facebook and Twitter have representative offices in Indonesia. They registered their representative offices in February 2014 and April 2015, respectively.

“They are supposed to pay taxes based on their income in Indonesia,” Tax office head Ken Dwijugiasteadi underlined, adding that the government would go after the back taxes due to their profitable operations in the country. (ags)

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