Indonesia sets economic growth between 5.2% and 5.6%, Google to pay up taxes

Bank Indonesia (BI) had offered a range of 5.1 per cent to 5.5 per cent with lawmakers leaning towards the range BI has set.

Indonesia economy growth slows
A teller holds Indonesian rupiah bank notes at a money changer in Jakarta, Indonesia. Reuters

Indonesia's House of Representatives Commission XI agreed to set an economic growth between 5.2 per cent and 5.6 per cent in the 2018 State Budget.

The Jakarta Post reported that the agreement was made by Finance Minister Sri Mulyani Indrwati and Commission members over the course of the two-day meeting on macro-economic assumptions earlier this week.

The government had proposed growth between 5.4 per cent to 6.1 per cent before the decision was set in stone, while Bank Indonesia (BI) had offered a range of 5.1 per cent to 5.5 per cent with lawmakers leaning towards the range BI has set.

Minister Sri Mulyani said it did not reflect optimism, adding: "We hope the lower bound can be raised to 5.2 per cent or 5.2 per cent, while the upper bound can be hiked up to 5.6 per cent or 5.7 per cent."

During the meeting, several agreements were also concluded on other assumptions including an inflation rate of 2.5 per cent and 4.5 per cent as well as the Rupiah exchange rate against the US Dollar to stand between 13,000 and 13,500.

It also concluded a three-month Treasury Bull rate of between 4.8 per cent and 5.6 per cent while agreeing that the poverty rate should stand between 8.5 per cent and 10 per cent while the human development index is set at 0.715.

All the agreed figures were still subjected to change until the 2018 State Bill is presented by President Joko Widodo in August said the commission chair Melchias Markus Mekeng.

Meanwhile, Antara News reported that Sri Mulyani had confirmed that the government had concluded an agreement on tax settlement with Google. She said an agreement was made based on the annual tax notification 2016.

Not elaborating on the quantum of the tax, she said Google hung onto its commitment to pay its taxes under the agreement.

Google was reported to have failed to pay taxes on grounds that the company did not have an office in Indonesia which led the Directorate General of Taxes to conduct an audit while urging the search-engine giants to submit its financial reports to assist the authority to calculate its tax obligation based on its income.

Google has been monitored by the tax authorities since April last year as the boom in information technology business had raked in high revenue from advertisers.

The government estimate showed that total advertising revenue from the industry has peaked at US$830 million with Google and Facebook sharing about 70 per cent of the total figure.

The government made claims that Google owed Rp5 trillion in backdated taxes and penalties since 2011, with estimated revenue of Rp6 trillion in 2015.