Government's Seriousness in Responding to Google Taxes Leads to Digital Business Regulatory Readiness

Issue taxation which drags internet giant Google in Indonesia is still rolling. Although special mediation has been carried out, there has not been a final agreement between the government (in this case the Directorate General of Taxes) and Alphabet, Google's parent company. Minister of Finance Sri Mulyani said on an occasion, his party was optimistic that an agreement would be reached before end of 2016.

From the news that was reported The Wall Street Journal, appears the value of the tax that Google will pay. Much smaller than the estimate, which is around $73 million, or Rp. 988,7 billion. Previously stated by the Directorate General of Taxes, Google's revenue (generally from advertising) in Indonesia reached Rp 5 trillion, assuming a margin of 35 percent of total revenue, so the taxable profit is estimated at Rp 1,75 trillion.

Google's tax settlement certainly raises a question, whether other companies (especially digital) will get the same treatment. This was answered firmly by the Minister of Finance Sri Mulyani, as quoted in Coverage 6 the following:

"Anyway, all those who have economic activities have value added here, of course, is the object and subject of tax. For us any company which has an activity that creates a tax object, he must have a domestic entity. Therefore, being a tax subject, he is subject to our tax laws."

Currently, the status is still in the stage of mature calculation, both by the Directorate General of Taxes team and the internal tax auditor from the Google company.

The urgency of the government to pursue Google taxes in Indonesia

Process tax settlement or negotiations between the two parties are being intensively carried out. This process is considered more beneficial to both parties. According to the Regional Office of the Special Jakarta Directorate General of Taxes, Muhammad Haniv, with this process, both parties do not need to calculate in detail, like the peaceful way. Tax settlement This is different from the usual audit process which takes into account tax payables from VAT, PPh, and other taxes.

This case is actually not only about how OTT companies provide income for the state, but if you look at it from another point of view, namely the development of the national digital business, it would be very naive if the government is not firm. This matter also made the Minister of Communication and Informatics finally take the initiative to setting up rules related to OTT service operations. One of the materials regulated is the matter of compliance in paying taxes.

With regard to digital corporate taxes, the current fast growth of e-commerce in Indonesia is also one of the main factors government talk, the rules are still being intensified. In addition, there are still many digital business processes that are still trying to be regulated by the government in relation to taxation, for example ride-sharing service.

All local digital business players certainly hope that the government will not be lenient with foreign companies in terms of regulations (taxes and other regulations), but be very strict with local players. At least that impression can be shown by the government through its seriousness in handling cases like the one faced by Google.