Google executives met Indonesian officials to negotiate tax bill: source

October 26, 2016 8:59 AM EDT

A man holds his smartphone which displays the Google home page, in this picture illustration taken in Bordeaux, Southwestern France, August 22, 2016. REUTERS/Regis Duvignau

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By Gayatri Suroyo and Eveline Danubrata

JAKARTA (Reuters) - Senior executives from the Asia Pacific headquarters of Alphabet Inc's (NASDAQ: GOOGL) Google met Indonesian tax officials on Wednesday to negotiate the internet search company's tax bill, a person with knowledge of the matter told Reuters.

No agreement has been reached yet, said the person, who declined to be named as the information was confidential.

A Google spokesman declined to comment.

Indonesia plans to pursue Google for five years of back taxes, and the U.S. company could face a bill of more than $400 million for 2015 alone if it is found to have avoided payments, senior tax official Muhammad Haniv told Reuters last month.

Google Indonesia has said it continues to cooperate with local authorities and has paid all applicable taxes.

Indonesia is eager to ramp up tax collection to reduce its budget deficit and fund an infrastructure program. Other governments around the world are also seeking to clamp down on corporate tax avoidance.

Thailand is studying plans to toughen tax collection rules for internet and technology firms, the head of the Revenue Department told Reuters last month.

Ken Dwijugiasteadi, Indonesia's director-general of taxes, declined to comment on whether the meeting with Google took place on Wednesday, but told Reuters in a text message: "When the time is right, we will hold a press conference."

The tax office alleges that Google's local entity, PT Google Indonesia, paid less than 0.1 percent of the total income and value-added taxes it owed last year, with most of the revenue from the country being booked at Google's Asia Pacific headquarters in Singapore.

The Indonesian tax office has estimated the total advertising revenue for the industry in Indonesia at around $830 million a year, with Google and Facebook Inc (NASDAQ: FB) accounting for around 70 percent of that.

But a joint study by Google and Singapore state investor Temasek released earlier this year estimated this at $300 million for 2015.

(Reporting by Gayatri Suroyo and Eveline Danubrata in JAKARTA; Additional reporting by Hidayat Setiaji; Editing by Bill Tarrant and Jane Merriman)



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