Firms evade tax: Treasurer

There are some companies that have been operating in PNG for many years, but yet, do not declare profit.

Treasurer Charles Abel revealed that this problem seemed to be cropping up in a particular industry, hence the engagement of international experts.

Relating to income tax, Treasurer Charles Abel said a particular industry has been consistently declaring losses.

And this is one of the problem areas that will be looked at, now that PNG has entered into an agreement with the Organization of Economic Cooperation and Development, or OECD.

PNG is participating in the OECD/UNDP Tax Inspectors Without Borders initiative, where countries are supported in building their tax audit capacity.

Through this participation, two industry and international experts will be helping the Internal Revenue Commission to determine what is really going on.

“And it can be very complicated,” admitted Abel. “You can multiple subsidiaries, you can have multiple overseas shareholders and owners.

“So this issue has been red flagged and it’s part of the reason why we asked for help to help these guys (IRC) to go and sort it out.”

The IRC has created a dedicated specialised audit team at the Large Taxpayer Office composed of seven officials with experience in international taxation matters. They have started to work alongside the international experts to:

  • Develop stronger risk assessment tools which will allow for the identification of taxpayers who may then be subject to audit;
  • Enforce information-gathering powers to identify and penalize taxpayers not disclosing required information;
  • Build sound audit cases addressing technical and legal aspects; and
  • Review the existing legislative tax framework to propose amendments to tackle tax avoidance and tax evasion by multinational companies.

(File picture)

Carmella Gware