Facebook to Open Local Unit in Indonesia

Facebook to Open Local Unit in Indonesia

Social networking giant Facebook Inc has received an in-principle approval to set up a domestic unit in Indonesia, home to the fourth-largest user base of Facebook.

Indonesia has been pushing multinational technology firms to be locally incorporated to prevent them from avoiding tax.

Indonesia complained foreign internet companies operate small business units to provide “auxiliary” services to get away with paying minimal tax, while booking the majority of their revenue from the country through a regional division.

Indonesia, with a population of 263 million, had 88 million monthly active Facebook users in June 2016, according to Internet World Stats. It increased from only 69 million monthly active Facebook users as of the first quarter of 2014, placing the country fourth globally after the United States, India and Brazil, according to data from the company.

Facebook did not respond to requests for comment and has not provided an update on the number of its users in Indonesia.

Head of BKPM Thomas Lembong. Image:
Head of BKPM Thomas Lembong. Image:

The office that Facebook opened in Indonesia three years ago allows it to work with advertisers as well as small and medium businesses "that need an education on how to market their products", a Facebook executive told local media at the time.

Indonesia is eager to ramp up tax collection to narrow its budget deficit and fund an ambitious infrastructure programme. Other governments around the world are also seeking to clamp down on what they see as corporate tax avoidance.

"I see good intention and spirit from Facebook," said Thomas Lembong, chairman of Indonesia's investment coordinating board to The Jakarta Post. "What we care about are taxes and responsible content."

The investment board and the communications ministry are currently looking at the type of business unit that Facebook will establish, Lembong said.

There are several ways to be locally incorporated in the country, including setting up a limited liability company, locally known as a PT (Perseroan Terbatas).



Indah Gilang Pusparani

Indah is a researcher at Badan Perencanaan Pembangunan Penelitian dan Pengembangan Daerah Kota Cirebon (Regional Development Planning and Research Agency of Cirebon Municipality). She covers More international relations, tourism, and startups in Southeast Asia region and beyond. Indah graduated from MSc Development Administration and Planning from University College London, United Kingdom in 2015. She finished bachelor degree from International Relations from University of Indonesia in 2014, with two exchange programs in Political Science at National University of Singapore and New Media in Journalism at Ball State University, USA. She was awarded Diplomacy Award at Harvard World Model United Nations and named as Indonesian Gifted Researcher by Australian National University. She is Researcher at Regional Planning Board in Cirebon, West Java. She previously worked as Editor in Bening Communication, the Commonwealth Parliament Association UK, and diplomacy consulting firm Best Delegate LLC in USA. Less
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