According to the Internal Revenue Commission, income tax is currently PNG’s top revenue earner while Goods and Services Tax (GST) ranks third.
When IRC Commissioner General, Sam Koim, took office in 2019, his team started exploring options of reducing the cost of tax administration by adopting effective collection measures, plugging leakages and improving compliance.
He outlined that IRC shares the cry of PNG’s working class concerning the high rates of taxes imposed on their salary and wages. However, they have to offer the government an alternative to offset the foregone revenue, that is why IRC aims to make GST the number one revenue earner for the government.
During yesterday’s joint awareness on Section 65A of the Goods and Services Tax Act in Lae, Acting Assistant Commissioner of the IRC Tax Audit, Ranzoline Kalokalo, reemphasised their vision.
Section 65A is a notice issued by the Commissioner-General for provincial and district agencies to withhold the 10 percent Goods and Services Tax portion, and remit directly to the IRC on behalf of their suppliers.
“That’s the goal of what we’re doing in terms of the 65A,” he stated. “From the 65A, there’s positive collection being done in terms of the revenue and as per the presentation today, the participants were able to appreciate how much revenue is being collected from the GST Section 65A.
“Basically, that’s where the Commission is heading in terms of collection of tax revenue. That’s where the Commissioner-General is emphasising on and he will emphasise it whenever he has the opportunity.”
Initiated in 2020, the GST Section 65A project was trialled with 15 agencies using the Integrated Financial Management System, and raised well over K20 million in 6 months.
Today, there are 168 authorised withholders or agencies.