Tax

Log exporting companies, through adverse transfer pricing schemes, have deftly reduced the taxable base, thus significantly diminishing their tax obligations.

Corporate Income Taxes, export levies, royalties, and other fiscal impositions have all been calculated based on this reduced foundation. This disconcerting reality has been substantiated by the first results of the IRC's ongoing audits within the logging sector.

The Audit revealed that this flourishing retail taxpayer declared around K53 million in GST credits for the periods January 2015 to April 2020. In other words, the taxpayer was telling the IRC that the company was paying more than what it was collecting in GST for each and all of those six years.

IRC Commissioner General, Sam Koim, says the current tax on consultants is being abused by companies.

Koim said their concern is the manipulation of this tax arrangement by companies who engage people as consultants, but, who fill in line positions or jobs.

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’s Treasury has entered into an agreement with the Organisation of Economic Cooperation and Development to see this through.

The Government has invited the Organisation of Economic Cooperation and Development (OECD) to assist them with some auditors to look at cross border transactions.

Deputy Prime Minister and Treasurer, Charles Abel, said these international taxation experts will also help the Internal Revenue Commission better manage the issue of multinational companies’ transactions.

In an earlier analysis of tariff tax, Ling-Stuckey said over 70 new tax increases have been imposed by PNC from 1 January 2019.

This includes a 15 percent tax increase for wheat flour, additional tariff tax of K1.70 per kilogram on all imported fresh chicken pieces and a new 25 percent tariff on all creams, yogurt and ice-creams, including UHT milk.

However, in response, Abel said the tariff on flour only affects retail packaged imported flour.

In a media conference on Sunday, TUC General Secretary, Clemence Kanau, said the tax issue will be a mainstay of TUC’s agenda this year.

He said while the government has announced in the 2019 Budget an increase in the ‘Tax Threshold,’ the rising cost of goods and services still remain a critical factor diminishing the purchasing power of workers.

Kanau said the tax regime has for far too long been a burden on the workers, and coupled with inflation moves them into the poverty line.

The TUC will make a strong stance against this.

He said a recent media report indicating that those who earn up to K12,500 a year will pay 22 percent is incorrect.

“Up to K12,500 a year is TAX FREE (increased from K10 thousand and previously from K6 thousand per year),” said Abel in his Alotau District Facebook page.

“From K12,500 to K20,000 is at 22 percent. From K20,000 to K33,000 is at 30 percent.

“For example, if you earn K33 thousand per year, the first K12,500 is tax free, the amount from K12,501 to K20,000 is taxed at 22 percent, and from K20,001 to K33,000 at 30 percent.

Shadow Minister for Treasury and Finance, Ian Ling-Stuckey, says over 70 new tax increases have been imposed from 1 January 2019.

“This includes a 15 percent tax increase for wheat flour used for making basic items such as bread – lifting the tariff level to a massive one-quarter of imported costs. You can get around this tariff increase, but only if you buy a bag of flour that weighs over 50 kilograms. This is economic lunacy!

The signing of the MOU with the Fly River Provincial Administration coincided with the official opening of a new IRC facility in Kiunga. The office space was allocated by the Fly River administration for its people to have easy access to IRC to make inquiries on tax matters, lodge documents relating to registrations, tax returns and pay their taxes.