Indonesia tells Google and other Internet firms to pay tax or risk getting blocked
Indonesia wants greater scrutiny on the revenues of global Internet companies in the country, so it can figure out if there are taxes owed to it.
It wants to look more closely at the earnings of big ad providers like Google. Additionally, it will start requiring other foreign online-based firms to register for "permanent establishment" status in the country so it can levy taxes on them. Those who don't comply risk getting blocked.
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According to Reuters, communications ministry spokesperson Ismail Cawidu pointed at Google, saying that the company has a huge user base in Indonesia, but the country may not be getting every dollar in taxes from the company's Jakarta branch because of the way digital transactions are calculated.
"If someone places an ad in Google, what do you think we get?" he was quoted as saying.
The report also quoted communication minister Rudiantara, who echoed that point. "Google has an office in Indonesia, but digital age transactions do not go through that office. That is what we're looking to straighten out," he said.
Foreign companies must set up offices
Apart from earnings, other global Internet firms which have Indonesian users must set up some form of a local presence, such as a registered office, Indonesia Finance Minister Bambang Brodjonegoro said Monday.
This will allow the government to impose taxes on them, as well as enforce its content restrictions.
The minister did not specify which firms exactly would be affected by this decision, but many of the popular Internet services have offices in the country. Google opened its Jakarta office in 2012, followed by Facebook in 2014 and Twitter was most recent, in 2015.
The government has already started exercising control over online content.
Recently, social network Tumblr got banned for several days, because officials were unhappy with pornographic content hosted on it. Tumblr's owner, Yahoo, reportedly shut down its office in Indonesia last year.
And last month, authorities demanded messaging app Line remove stickers featuring same-sex couples, because it wanted to discourage visible homosexuality.
Line ended up removing the related stickers and posted an apology on its Facebook page as well. Line has a Jakarta office, and its 30 million Indonesian users form its second-biggest base outside of its home country, Japan.
The populous country is already the source of one of the world's largest online user bases, and at just 29% Internet penetration, also represents much potential to grow beyond that.
Facebook, for example, has over 69 million actively on the network, as of mid-2014. Indonesia is generally regarded as Facebook's fourth-largest base globally, behind the U.S., India and Brazil.
The country is also a hugely valuable market for Twitter, which had 30 million active Indonesian users last year.
We've reached out to Google for further comment on the minister's remarks on its taxes in the country.
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Victoria Ho is Mashable's Asia Editor, based in Singapore. She previously reported on news and tech at The Business Times, TechCrunch and ZDNet. When she isn't writing, she's making music with her band
