European Union: A Critical Assessment

Committee calls for review on tax incentives

Source: Post-Courier, October 29, 2015, 01:39 am

BY ROSALYN ALBANIEL

BILLIONS of kina in revenue are being lost every year through tax concessions to investors and recommendations have been made to the Government for a complete review on this incentive.

This is the finding of the Tax Review Committee which has recommended the establishment of a centralised economic development board to coordinate economic development priorities.

The review of tax concessions is one of seven recommendations which the committee, headed by former Tax Chief Sir Nagora Bogan, highlighted yesterday when it delivered its final report to Treasury Minister Patrick Pruaitch in Port Moresby yesterday.

Team leader of the Tax Review Secretariat Kessie Sawang said the review had shown that there was no over-arching framework governing how the Government gives its tax incentives, including tax exemptions to companies which are operating in PNG.

She said that these had been done on an ad hoc basis at the prerogative of the Government but added it had resulted in substantial revenue loss.

Sir Nagora said the committee had looked at exemptions at the extractive industry, noting that a separate study by the International Monetary Fund says PNG has been overgenerous.

"So we are saying that Government cuts down all the project-by-project arrangement," he added.

"Under the generic terms of tax where you treat people like Steamships, Independent Public Business Corporation (IPBC) now Kumul Consolidated Holdings Limited) and all the corporate entities the same, why not do the same for mining and petroleum," he said.

Sir Nagora said the current project to project negotiations and arrangements were administratively messy and had stated there was a need for a framework that is transparent to be put in place.

"We are saying to do away with some of the incentives that we have given away to extractive sector," he said.