The finance minister of Southeast Asia’s biggest economy said Wednesday that Indonesia’s tax office will inspect local offices of technology giants Google, Facebook, Twitter and Yahoo to establish if the tech companies have unpaid taxes in the country. While the companies have been paying income tax, they were liable to pay value added tax applicable on advertising revenues they generated in Indonesia, the minister reportedly said.
Finance Minister Bambang Brodjonegoro said that the four companies had chosen not to establish permanent offices in Indonesia to avoid paying taxes, the Jakarta Post reported. The country had proposed a law last week that would make it compulsory for internet-based services in Indonesia to incorporate themselves and pay taxes locally, according to the Wall Street Journal.
Yahoo and Google have limited liability companies in Indonesia, while Facebook and Twitter operate local representative offices of their Asia-Pacific operations in the country, according to Reuters.
The finance minister said Indonesia was demanding the same thing from these U.S. technology companies as other countries like the United Kingdom, France and Italy.
“These companies have been getting many businesses here, especially from advertising, and we are not sure that they’ve been paying the taxes correctly in accordance with the amount of businesses they’ve earned from Indonesia,” Brodjonegoro said, according to the Journal.
Roy Simangunsong, Twitter’s business head for Indonesia, said the company “will fulfill all obligations as a representative office in Indonesia,” Reuters reported.
A spokesman for Google said the company continues “to pay all applicable local taxes,” the Journal reported.
Indonesia, with about 250 million people, is the world’s fourth-most populous country. It is also reportedly the country with the fourth-highest number of Facebook users, and also has a significant number of people using Twitter.
Scrutiny of these companies comes amid the country facing a significant shortfall in its tax collection for the year, compared to its target of $117 billion.