Indonesia Raids Google Office After Warning on Tax Audit Refusal

(Bloomberg) -- Google Inc.'s Jakarta office was raided by Indonesian authorities after they warned the company for refusing a tax audit.

Officers visited Google's office in central Jakarta "many times" in the past two weeks to collect data and repeatedly sought meetings with senior company officials, Muhammad Haniv, the head of special taxpayers at the Finance Ministry, said in a phone interview Thursday. Google has "paid all applicable taxes in Indonesia," Taj Meadows, a spokesman, said by e-mail, adding the company is cooperating with the government.

"Everyone must comply, whoever they may be," Haniv said. "If you refuse to be audited, then we will keep chasing you." The government had earlier written to the company warning it for refusing a tax audit, which can result in criminal punishment, he said.

President Joko Widodo's government is following in the footsteps of European authorities in pushing Google to pay more taxes as it steps up efforts to earn more revenue from internet companies. He's under pressure to do so as this year's state revenue is set to suffer an estimated 218 trillion rupiah ($17 billion) shortfall, while earnings from a tax amnesty program are set to miss his target. 

Indonesia May Block Websites of Tech Companies Avoiding Tax

Indonesia has been asking internet companies to set up permanent local entities for tax purposes since as early as April. It's also promising lower rates compared to the 30 percent corporate income tax and 25 percent value-added tax that would otherwise apply to Google's sales of advertisement to local companies, according to Haniv.

--With assistance from Rieka Rahadiana To contact the reporters on this story: Herdaru Purnomo in Jakarta at hpurnomo1@bloomberg.net, Yudith Ho in Jakarta at yho35@bloomberg.net, Amit Prakash in Singapore at aprakash1@bloomberg.net. To contact the editors responsible for this story: Linus Chua at lchua@bloomberg.net, Amit Prakash, Karthikeyan Sundaram

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Source: Indonesia Raids Google Office After Warning on Tax Audit Refusal