|Google opened its Jakarta office in 2011. (AFP/LOIC VENANCE)|
The two sides have been locked in a row since last year when the government alleged that the California-based company had refused to cooperate with its tax office.
A senior tax official had claimed the company had not fulfilled its obligations and owed over US$400 million in taxes and fines for 2015 alone. Google insisted it had paid all taxes due in Indonesia since opening its Jakarta office in 2011.
Finance Minister Sri Mulyani Indrawati told reporters on Tuesday that "we had a discussion with them (Google) and reached an agreement based on the 2016 tax report, but because it is confidential we don't disclose the amount".
She did not give further details, and it was not clear whether an agreement had also been reached regarding tax payments prior to 2016.
No one from the tax office or Google's Jakarta office could be reached for comment.
Jakarta has also put pressure on other foreign tech behemoths such as Facebook and Yahoo over their tax arrangements inside Indonesia.
Global tech businesses have flooded Indonesia in recent years to capitalise on the exploding number of internet users in the Southeast Asian nation, where an increasing number of people are going online for the first time using smartphones.
A third of Indonesia's 255 million have access to the internet but analysts say that number is likely to increase as connectivity improves across the sprawling archipelago.