Indonesia eyes Facebook as part of new tax crackdown

Indonesia is eyeing Facebook as its next target in a government tax crackdown as it nears a settlement with Google. The country has contacted Facebook's Irish office in relation to the matter.

Facebook, which counts more than 88 million Indonesians among its users, owes about 2 trillion rupiah (€140 million) to 3 trillion rupiah in unpaid taxes and penalties, Muhammad Haniv, head of the special taxpayers office at the finance ministry's tax directorate-general, said on Wednesday in Jakarta.

The office has sent a letter to the company in Ireland, calling for a meeting to discuss the issue and seek information on the company’s business interests in Indonesia, he said.

Yunita Purnamasari, an external spokeswoman for Facebook in Jakarta, said on Thursday that she couldn't comment on the tax demand at this stage.

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Apple, which is also being targeted by the tax office along with Twitter and Yahoo, didn't immediately respond to a request for comment.

Indonesia's government is seeking to boost revenue as it tries to keep the budget deficit below the legal limit of 3 per cent. Authorities have turned to Instagram stars and merchants peddling goods and services on social media to bridge a revenue shortfall as an ambitious tax amnesty program loses steam after earning the government 97.1 trillion rupiah in the first three months of its start in July.

Google settlement

Indonesia’s government plans to drop claims on any unpaid taxes and penalties it has sought from Google if asettlement is arrived through negotiations, Mr Haniv said. The settlement with Google,the largest unit of Alphabet, may come as early as next week and the government will focus on ensuring the company pays all future taxes, he said. The company owes about 5 trillion rupiah in taxes and penalties, he said.

Taj Meadows,Google’s head of policy communications for Asia Pacific, declined to comment on Wednesday and referred to an earlier statement that said the company had paid all applicable taxes and will continue to fully co-operate with the Indonesian government.

Indonesian tax officials have visited Google’s office in central Jakarta several times in recent months.

The government had earlier sent Google a warning letter for refusing a tax audit that can result in criminal punishment, Mr Haniv said in September.

(-Bloomberg)