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Alphabet’s Tax Woes Mount, Indonesian Unit Faces Allegation

Zacks

Alphabet Inc. GOOGL is already a major subject of scrutiny in Europe and it appears that the matter has started to spread across Asia as well. Indonesia’s tax agency is reportedly planning to bill the company for five years of back taxes and associated fines.

What’s the Probe All About?

The local tax office believes that PT Google Indonesia has paid less than 0.1% of the total accumulated taxes as of 2015. It decided to raid the company’s regional headquarters in Singapore, Google Asia Pacific Pte. Ltd. after it refused to be audited in June.

According to the head of the tax office’s special cases unit, Muhammad Haniv, a team of four tax investigators went to Google's office in Indonesia on Monday and discussed the alleged back taxes and audit of tax compliance records.


Haniv said that if Google is found to have broken the rules, it might have to pay four times the tax it owes. In response, a Google Indonesia spokesman stated that the company cooperates with the government and has paid all applicable taxes in Indonesia.

Google Out of Favor with European Authorities over Taxes

In January, Google reached an agreement with U.K. tax officials to pay nearly $190 million in British back taxes and make changes in the style of calculating its UK tax bill.

The UK settlement was followed by further investigation. Officials raided Google’s French headquarters in May searching for evidence of "aggravated tax fraud" and money laundering as Google paid just $1.76 billion as back taxes there.

ALPHABET INC-A Price

Our Take

Google is embroiled in a legal battle across practically all continents. Apart from being a huge drain on resources, these have earned for it a bad name on privacy concerns, anti-competitive concerns, patent infringements and what have you.

The good news is that the company has had extraordinary success in the courtroom and with government officials around the world. Its streak of “good luck” can change at any time and so investors remain wary.

Zacks Rank and Stocks to Consider

Currently, Alphabet is a Zacks Rank #3 (Hold) company. Better-ranked stocks in the in the broader technology sector include Facebook, Inc. FB, Yirendai Ltd. YRD and LinkedIn Corporation LNKD, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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