Indonesia says it will examine some Internet-based companies' tax reports

[April 06, 2016]  By Hidayat Setiaji

JAKARTA (Reuters) - Indonesia's finance minister on Wednesday said the tax office will examine tax reports of the Indonesian offices of four Internet-based companies to check whether they have been paying correctly what they owe.

Minister Bambang Brodjonegoro named the four as Yahoo, Twitter, Google and Facebook.

While those companies have paid income taxes, they are still liable to value added tax applicable to revenue generated from advertising in Indonesia, he said.

Southeast Asia's largest economy is facing a sizable revenue shortfall this year as the resource-rich country can no longer rely on commodity-related income.

A decision to raise the threshold at which individuals start owing income tax in June, announced on Wednesday to boost economic growth, may aggravate the shortfall.

Out of the four companies, only Yahoo has formed an Indonesian limited liability company. The other three operate branches of their Asia Pacific offices in Indonesia.

"Revenue from ads should be part of those taxable by us, we're doing a review," Brodjonegoro said, adding that Indonesia is demanding the same thing that Britain demands from those companies.

"The point is we will be serious in straightening up taxes on digital economy," he said.

The communication ministry has given an estimate of the value of digital advertising in Indonesia of about $800 million last year. But the ministry said all was untaxed.

Twitter is widely used in Indonesia, home to the world's fourth-largest number of Facebook users.

Roy Simangunsong, Twitter's country business head for Indonesia, said he could not comment directly on the minister's statement, but said Twitter "will fulfill all obligations as a representative office in Indonesia".

An official at Google declined to comment before seeing the minister's statement and later could not be reached for comment.

Queries emailed to Yahoo and Facebook media officials were not answered.

(Refiled to clarify in paragraph six that three of the four companies operate branches)

(Reporting by Hidayat Setiaji; Additional reporting by Agustinus Beo Da Costa and Eveline Danubrata; Writing by Gayatri Suroyo; Editing by Richard Borsuk, Robert Birsel)

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