Google may finally be nearing a tax settlement with the Indonesian government. Apparently, the company is readying up to clear its backlog of fines and taxes and will also agree to a new method of calculating its annual profits made through operations in the country.
The news comes through Reuters, which cites people close to the matter. If you remember, the search giant recently got into scuffles with a lot of countries over allegations of not having paid its corporate taxes properly. The Indonesian government was one of the authorities that were pursuing Google over its avoidance of taxes. What further complicated the issue was the fact that most of the revenue generated by Google in Indonesia is handled through its Singapore headquarters.
That makes it difficult for governments to accurately track the flow of money. As early as September, Indonesia said that it was planning to pursue Google for almost five years of back taxes. While neither Google nor the Indonesian government have come up with an official figure yet, Google could find itself paying as much as $400 million for 2015 alone.
While $400 million isn’t an amount that could leave the tech behemoth with tens of billions of annual revenue worried, paying back taxes in Indonesia could set the precedent for other countries as well. UK, Thailand and Australia only some of the nations that are planning to hound International corporations that have been avoiding tax over the past years.
Speaking on the topic, Yustinus Prastowo, executive director of the Center for Indonesia Taxation Analysis, said,
I think other countries that have a significant population will also try to chase Google for taxes.
Indonesia plans to use the fund it receives to plug its budget deficit and fund an ongoing infrastructure program in the country. While there has not been an official peep from either Google or the Indonesian authorities, we expect some more concrete news over the course of the next few weeks.