Category Archives: Taxation

Raids In City

The National

By CLIFFORD FAIPARIK

A MAJOR government operation led by the Immigration Department has uncovered illegal activities conducted by some foreign-owned businesses in Port Moresby.

A team comprising officers from the PNG Customs, Labour Department, Investments Promotion Authority, National Capital District Commission, Bank of PNG and police inspected some businesses and questioned foreign workers yesterday.

The team confiscated two vehicles allegedly smuggled into the country in a container.
The officers also questioned 30 foreign workers for allegedly breaching their visa conditions and work permits.
Deputy Chief Immigration Officer, compliance and border division Dino Mas, who invited The National to accompany the officers yesterday, said each government agency was to check to see if the foreign-owned businesses and workers were complying with  PNG laws.

During a debriefing session after yesterday’s inspection, officers exchanged information and discussed what they had discovered.

PNG Customs Officers said they discovered two brand new vehicles, yet to be introduced to the country, hidden in a container.

“These model vehicles have not been introduced yet into PNG. Yet they are already here. We checked the payment documents and discovered that the owner paid only K8000 for each vehicle,” an officer said.
“We will check our overseas counterpart where the vehicle came from, how these vehicles were shipped out of their country.

“We also discovered large quality of undeclared cigarettes in a container in the same premises. These cigarettes were brought in without paying custom taxes.”
Bank of PNG officers, who requested anonymity, said some of these foreign companies had been avoiding paying taxes to the Internal Revenue Commission.

“Some of these companies are making up to K2 million profit annually. But they were declaring around K500 in tax return. So they are avoid paying taxes,” one officer said.
“Seeing their business operations from outside, it is very big. But when they provide business reports, they make it a very small operation.”
The officers said there were many smaller companies but linked to only three or four big companies.

“And they transfer all the money to one parent company and from there, they bank it in an overseas account.
“This is money laundering. We discovered large amount of cash in their premises and discovered that they don’t bank their money in our commercial banks.

“We encourage them to bank the money for security reasons.”
Labour officers requesting anonymity said they discovered that some companies were not paying superannuation for local staff. They also do not pay the minimum K3 an hour rate.
“Some of these foreign employees are doing jobs that locals can do like operating cash registers. But on their work permit they are managers.

“We also found out that there are too many managers for one job. Some of them come on dependent or tourist visas.  But they end up doing business.”
The Labour officers also discovered that some foreign workers were paid in cash so that their employer would avoid paying tax.

K3.1b Pay-Hike Bill Probed

By CLIFFORD FAIPARIK ( The National )

 

AN exercise is being carried out in government departments to find out why the total civil service salary bill swelled by K3.1 billion from K1.4 billion to K4.5 billion in four years.

Public Service Minister Elias Kapavore said a data-cleansing exercise which had begun should identify positions being duplicated.

The exercise involves the Personnel Management Department in consultation with the departments of Treasury and Finance to verify the huge annual increases to the public sector wage bill.

“The primary records show that the public sector wage bill in 2012 was K1.4 billion. This increased to K4.5 billion in 2016,” Kapavore said.

“While we need the increase in manpower to meet services demands, we must be accountable and prudent in controlling costs and achieving efficiencies.”

Kapavore said the data cleansing exercise would include national and provincial administrations “to establish a one-person, one-position, one-pay status for all public servants”.

“We will make it compulsory for all public servants to be registered through the national identification system,” he said.

“All organisations must improve their staff profiling system to put faces to the names of all public servants.”

Kapavore said he was seeking the cooperation of all sectors to support the government initiative “as we strive to improve productivity”.

Earlier, Kapavore said some public servants around the country were yet to be inducted in the public service system.

“That’s why they don’t know their job descriptions,” he said.

“There are many public servants not been inducted on their roles and responsibility.

“Induction programmes are so important. Once someone is recruited, they must be given their job description so that they will know what is required of them. They must also understand the General Orders and Parliament Acts.”

PM APPLAUDS ABEL FOR BUDGET

BY : Post Courier

Prime Minister Peter O’Neill has commended his deputy and Treasurer Charles Abel for successfully handing down the 2017 Supplementary Budget in Parliament yesterday.

“I commend the Treasurer as this is his first budget/money plan. There are now some renewed sense of energy in Treasury and of course as a result of that you can see some real drive into outstanding issues like over expenditure by public servants. The Treasurer is definitely getting things back on track.”

Mr O’Neill said that development is taking place across the country in the areas of infrastructure, health and education. “This is only the beginning and we will make sure we deliver before this term expires,” he said.

“You see, when we came into office in 2012, we built major infrastructure that you see now,” he said.

“If we did not build these infrastructure, the recession will be far worse than today.”

Mr O’Neill said the National Alliance-led government was in control for 15 years and they handed out about seven supplementary budgets when they had surplus, but never built any infrastructure.

“To date, they still can’t name an infrastructure they built, and they left no money in the Trust Account,” he said. “Treasury is the engine room, the heart that controls the body, and you should be very careful.

“It is a fact, that we are all responsible to correct the position when they are course blow outs, to correct it so we set new targets and that is 2.5 per cent of GDP,” Mr O’Neill said.

2017 Supplementary Budget Top Agenda

By : Post Courier

The 2017 Supplementary Budget tops the government agenda when Parliament resumes at 2 o’clock this afternoon.

Deputy Prime Minister, Charles Abel, is expected to hand down the mini budget during this session.

Leader of Government Business, James Marape, could not be reached for comments, but the government has indicated bringing in the Independent Commission Against Corruption Bill (ICAC) to at least test the numbers in this session.

The government is also expected to bring through legislations including the National Energy Authority Bill, for the creation of the similar entity like the Mineral Resource Authority, to aggressively drive LNG projects.

The House will start with Ministers giving their statements and entertain questions without notice.

The tabling of the 2017 Supplementary Budget is point 1 in the 25-point 100-day plan of the O’Neill Government.

Prime Minister Peter O’Neill, said cabinet had decided to support a supplementary budget to maintain the parametres of the 2017 Budget proper.

Mr O’Neill said after a period of sustained high economic growth spurred by the PNG LNG Project construction phase and sustained increases in government spending, circumstances such as the collapse of the price of oil and the El Nino drought, and a slowdown in global growth had dampened economic growth.

He said the mid-year economic fiscal outlook report from Treasury has highlighted these emerging issues with a downturn in government revenues as well as an increase in public service wages, interest costs and rentals, and the rationing of foreign currency.

He said the supplementary budget maintains a 2.5 percent budget deficit and 32 percent debt to GDP ratio in the 2017 Budget proper by deferral in the Service Improvement Program and cuts to the capital and recurrent budgets.

“The SIPs (DSIP/PSIP) are a very important pillar to our government, however, the cabinet has recognised the need for discipline during tough times. The deferral to SIPs will be replaced in subsequent budgets,” Mr O’Neill said.

He said the Supplementary Budget will also boost medicine procurement, coffee berry borer response and more funds to the Department of Works.

He said a range of other measures are also brought to support and give direction around the 100-day, 25-point plan.

Improvements to Taxes and Infrastructure Crucial for Papua New Guinea SMEs, says Millennium Water MD

Source: Business Advantage PNG

Achilles Peni’s water treatment business was one out of 10 companies selected to participate in Papua New Guinea’s SME Advancement Program, led by the World Bank, the Government and Bank South Pacific PNG.

The company sells purified water from Port Moresby. It has long-term plans to build the first natural mineral and spring water facility in Papua New Guinea.

Peni, who is a water and wastewater treatment technologist with over 26 years experience, says the company will then be positioned to bottle water directly from the base of the Owen Stanley Range near the Kokoda Track.

Market

There is a large potential market. According to a study by Water Aid, Papua New Guinea has the world’s worst access to clean water. It found that 4.8 million people in the country do not have clean water.

The Water Aid study says access to clean drinking water and sanitation is an issue for over half of Papua New Guinea’s population. The annual rainy season is also often followed by drought, which adds to the difficulties.

‘One way to support local producers is to increase taxes on imported goods.’

Lae

Peni says the company’s Lae branch initially operated ‘very well’ but the economic downturn meant that it had to be closed down. He says he has been forced to adopt a defensive strategy.

‘Millennium Water is surviving, but the company isn’t thriving.’

Peni lists his greatest challenges as high freight costs, and the lax application of importation taxes. He says many local businesses struggle to get their products transported to the buyers in a reasonable timeframe.

One way to support local producers, he says, is to increase taxes on imported goods.

‘The Government must promote local products first by imposing an import duty tax. These actions will help create a level playing field.’

Peni says reducing freight costs and developing local infrastructure, especially rail and road, will also greatly aid PNG SMEs.

Contracts

Millennium Water has continued to be successful during the economic downturn by securing contracts with large companies, including PNG Power Limited and ExxonMobil.

‘Keeping the dispensers clean helps to maintain the light, sweet taste of the water.’

In addition, the company offers cleaning of its water dispensers free of charge, to attract and maintain its client base.

Keeping the dispensers clean helps to maintain the light, sweet taste of the water, which makes the product competitive, Peni explains.

Tax On Retirement Fund Remains A Challenge

The eight percent tax on employers’ contribution to super funds remains a major sore point in the formal sector.
Bank of Papua New Guinea Governor Loi Bakani admitted the levy remained a challenge.

Mr Bakani said this while discussing how super funds can assist micro banks to drive the process of financial inclusion in the rural areas which a delegate from the summit asked if the tax component from an employer’s contribution of eight percent be pumped into micro finance to generate capital.

As it is, this may not be possible but Mr Bakani said this spurred a need for the central bank as regulator with other stakeholders to dialogue with government for a review and if possible omit the tax.

“The government has been taxing the eight percent which is something that we didn’t want to happen but as we do regulating and overtime we might get the government not to tax the eight percent,” he said.

He said the establishment of super funds was to help workers have access to funds while working and contributing.
“This is an issue of how do you help the members create wealth for themselves while working and getting money out of the super funds.

“How we can help the contributors while working can create wealth for themselves to improve the livelihood and super funds are very much having the direction to help in that part of the inclusion sector,” he said.

Asian Development Bank (ADB) senior financial sector expert Dr Peter Dirou also confirmed that taxation on retirement funds is one of the issues that is faced everywhere including Australia.

“We want the government to keep their hands off our super funds that is our money,” he said.

Govt to clamp down on tax-evading firms: Abel

The National

SOME firms in the resource sector are avoiding paying tax to the Government, says Deputy Prime Minister and Treasurer Charles Abel, pictured.

Announcing the 100-day 25-point plan on Friday, he said the government would clamp down on these firms.
Abel also said the taxation system was too “complicated” for the people to understand.

He said government revenue was decreasing.
“With this complicated taxation system and the concessions that we are giving, our mineral and petroleum taxes are falling to almost zero,” he said.

“There is gas, gold  and oil leaving our shores,” he said.
“There’s record amounts of unprocessed round logs and tuna leaving Papua New Guinea.

“I need to know why revenue is shrinking and these things are happening.

“I need to know why I’m not processing my oil and gas, producing cheaper, reliable, clean energy to the people of PNG using their own resources.

“What is going on with this fiscal regime that is not encouraging these things to happen in a faster manner?”
Abel met IMF and World Bank officials last Friday “to help us create a medium-term revenue strategy”.

“I’ll be driving that programme, and on top of that policy, I want a simpler tax system for everybody,” he said.
“We are not going to impose any more tax on anybody. But there are firms and individuals who just have been beating the system.”

Abel said Prime Minister Peter O’Neill had instructed that there would be no additional taxes imposed on people
“We want a fairer and simpler system.

“We want to make sure that we collect taxes owed to the government so that we can provide the services (people) need,” he said.