Google Indonesia faces tax evasion charges

INDONESIA - Google Indonesia has recently come under the scanner of tax authorities in the country for not paying its taxes correctly. If the allegations are found to be true, the technology major could be slapped with fines and back taxes of up to US$418 million for 2015 alone.

For its part, Google released a statement that read, “Google Indonesia has been incorporated as a local company since 2011. We have been and will continue to cooperate with the government and have paid all applicable taxes in Indonesia.”

Owing to plummeting energy prices and economic slowdown, the Indonesian government has been looking for ways to achieve its GDP targets. It had floated a tax amnesty program earlier this year hoping to generate tax revenue. However, the collections so far stand at approximately 40 percent of the target for the year. Thus, prompting the government to cast a wider tax net.

With the digital industry in Indonesia growing by leaps and bounds, it is no surprise that it has caught the fancy of Indonesian tax sleuths. In the last two years, digital ad spending has grown from $210 million to $367 million. eMarketer further expects digital ad expenditures in Indonesia to see a CAGR of 17 percent from 2016 to 2020, when they will account for 19.3 percent of total ad spending.

Total media ad spending in Indonesia is expected to touch $2.69 billion in 2016.

Google, along with You Tube, accounts for 60 to 65 percent of digital spend in Indonesia, followed by Facebook, which holds up to 30 percent, with local publishers accounting for the rest, according to industry estimates.

Unilever, Indonesia’s largest advertiser, has doubled its digital spending in the last two years.

“In line with our target audiences’ habits and progression, we have grown our presence substantially in the last three to four years across all digital touchpoints including search, multimedia experiences with voice and static video across our own brand assets and through publishers,” said Eka Sugiarto, Unilever’s head of media.