Facebook has received an in-principle approval to set up a domestic unit in Indonesia, said a senior government source from the Southeast Asian nation, home to the social networking giant's fourth-largest user base.(Reuters Photo/Dado Ruvic)

Indonesia Turns to Facebook Back Taxes After Google Nears Settlement


NOVEMBER 24, 2016

Jakarta. Indonesia will soon pursue technology company Facebook for back taxes following a settlement with tech giant Google in the next few weeks, a senior official told reporters on Wednesday (23/11).

"We have sent a letter to Facebook," Muhammad Haniv, head of the specials cases branch at the Directorate General of Taxes, said on the sideline of a seminar in Jakarta.

Haniv said Facebook generates between Rp 3 trillion and Rp 4 trillion ($221 million to $295 million) in advertising revenue a year in Indonesia alone, or around 20 percent of the total revenue made by over the top providers, including Google.

"They welcome [dialogue] but they feel that they don't have the obligation to pay tax in Indonesia," he said.

Facebook, according to Haniv, claims that it doesn't have a permanent establishment — or a fixed place of business to generate income and value-added tax liability — in Indonesia. Facebook has a representative office in Jakarta.

The tax authority is open for a tax settlement with Facebook which will also affect future profits made in Indonesia, Haniv said.

"All settlement is under the supervision of the Finance Minister and Directorate General of Taxes. Many people watch this closely," he said.