After months of going back and forth, the Indonesian government has today said that it has reached a settlement its long-standing tax dispute with Google parent Alphabet. The new settlement figure has been calculated using a new method and finally puts an end to allegations that the search giant was alluding the necessary tax payments in the country. This also falls in line with reports that a judgement was due very soon.
Speaking about the settlement, Indonesia’s Finance Minister Sri Mulyani Indrawati in a statement said (via Reuters):
We’ve already reached an agreement with them based on 2016, but we can’t disclose the figure.
This is an interesting development as the two parties have reached an agreement for only one backlog year. The government had been pursuing the search giant to bill them for the avoidance of taxes and insufficient annual payments for the previous five years. It is doing the same because accurately tracking the flow of money is difficult due to the revenue of the Indonesia business is being handled through the company’s Singapore headquarters.
It is presently unclear whether Google and the Indonesian government have come to terms or if the latter is still looking into the former’s previous payments. The search giant was expected to shell out over 5 trillion rupiah (approx $376 million) in taxes for a single year — 2015 but it paid only 5.2 billion rupiah (approx $391,000).
If the government’s investigation concurs a positive result then it could hand the search giant a hefty bill of about $400 million for 2015 alone. We’re still not taking into the account three years, which means this payout could put a little strain on Google’s flooded bank account.
Indonesia, on the other hand, is planning to employ the freshly infused capital to narrow its budget deficit and further fund their ongoing infrastructure program in the country. Google has not been accused of alluding required tax payments in Indonesia, but instead it has been fighting the same lawsuit in different countries across the globe, especially the European Union, Thailand and Australia.