Surprise in store for the tax payer

Source: Post-Courier, November 06, 2015, 12:59 am

BY GORETHY KENNETH

THE 2016 Budget contains few surprises for taxpayers major PNG accounting firm KPMG International has warned.

The KPMG team released in their analysis of the 2016 National Budget that this major tax reform is currently being considered by the tax review committee with their final report provided to the Government in late October 2015.

"The tax review committee presented their report to the Treasurer last week," the team noted, adding that the review of the tax system has 92 recommendations in a far-reaching report that can bring a substantial change to the taxation landscape in PNG over time.

KPMG said they would issue a separate document on the Tax Review Committee recommendations shortly.

"The proposed timeframe for the recommendations are from 2016 to 2020. The Government has committed to stakeholder consultation in considering and designing the changes.

"The Tax Review provides an opportunity for taxpayers to respond as Government sets the framework for the future of the tax system," Praneel Nand tax partner said.

Treasurer Patrick Pruaitch when handing down the 2016 National Budget said that the Tax Review Committee has undertaken an extensive review of PNG’s tax system with the overarching aim of improving the lives of the people of PNG through a more effective tax system.

He said that these reforms will assist the Government to deliver on its commitment to return to a balanced budget by 2020. Being an independent review, recommendations from the Tax Review Committee are not Government policy.

"The Government will study the Committee’s recommendations with a view to implementing reforms in the 2017 Budget and beyond.

The Government is committed to reforms that will ensure taxpayers pay their fair share of tax and that PNG receives a fair return for all its natural resources. The move to a fairer and more broad-based tax system should help capture all forms of income, including capital gains which is presently not taxed.

A fairer tax system also ensures that any incentives or concessions are achieving their intended outcome. One particular example, the Infrastructure Tax Credit, is one form of incentive that has expanded from its original application and requires assessing the public value of the benefits it provides.