JAKARTA Alphabet Inc’s (GOOGL.O) Google Asia Pacific headquarters has agreed on future tax payments with the Indonesian government, the country’s communications minister said on Wednesday.
Finance Minister Sri Mulyani Indrawati had said on Tuesday that Indonesia had reached a tax deal with Google for 2016, following a months-long dispute over allegations that the search giant had not made enough annual payments.
Google’s tax dispute with Indonesia has been seen as a bellwether of how the government of Southeast Asia’s biggest economy may pursue other technology companies such as Facebook Inc (FB.O) and Twitter Inc (TWTR.N) for taxes.
“On the solution for future taxes, they (Google Asia Pacific) have agreed with the government,” said Rudiantara, Indonesian Minister of Communications and Information, who has oversight on internet-based companies operating in the country.
This may be subject to changes in Indonesia’s regulation for the advertising business, said Rudiantara, who goes by one name.
Rudiantara declined to comment on whether Google has reached an agreement with Indonesia on its taxes for previous years.
Google’s Asia Pacific headquarters is in Singapore, while its Indonesian entity, PT Google Indonesia, was incorporated in 2011.
Google did not immediately respond to requests for comment.
A senior tax official had said in September that Indonesia planned to pursue Google for five years of back taxes and the company could face a bill of more than $400 million for 2015 alone if it were found to have avoided payments.
Indonesia is eager to ramp up tax collection to narrow its budget deficit and fund an ambitious infrastructure program. Other governments around the world are also seeking to clamp down on what they see as corporate tax avoidance.
Last year, Google agreed to pay 130 million pounds ($164 million) in back taxes to settle a probe by Britain’s tax authority, while Thailand is studying plans to toughen tax collection rules for internet and technology firms.
(Reporting by Cindy Silviana and Jakarta Newsroom; Additional reporting by Eveline Danubrata and Gayatri Suroyo; Writing by Eveline Danubrata; Editing by Alexander Smith)