Clearance certificates
Last week’s TaxTalk discussion was
centered on powers that the Internal Revenue Commission (IRC) has to
recover unpaid tax by issuing a “garnish” notice. In this and other
subsequent articles, I will continue with other options available to
the Commissioner General to pursue in order to recover unpaid taxes.
The first of such other options is the issuance of a tax clearance
certificate by the Commissioner General.
You may have a situation where a taxpayer decides to leave PNG without
paying his tax liabilities. In some cases, taxpayers with outstanding
taxes do leave without notifying the Commissioner General and they are
under no obligation to do that. But where the Commissioner General has
knowledge and believes that a person liable to pay tax may leave PNG
before that date on which tax is due and payable, the Commissioner
General may decide on a date (apart from the one shown on the notice
of assessment) and notify that person. His tax, therefore, is then due
and payable on the date his is notified. This is to ensure that every
taxpayer pays his taxes before he leaves and that the State’s revenue
from income tax is protected.
Our income tax law allows for a taxpayer to make an application for a
tax clearance certificate from the Commissioner General or the
Assistant Commissioner for Revenue Collection to enable him to leave
PNG. If they are satisfied and have no objection to the departure of
that person, then they may issue a tax clearance certificate. They
would only grant this certificate if they are satisfied that tax is
not payable by that person or that alternative arrangements have been
made by that person for the payment of any tax that is or may become
payable. If it is also shown the tax payable by that person is
irrecoverable, then a certificate would also be issued.
All that the tax clearance certificate does is to allow the taxpayer
to leave PNG without any hiccups by the Commissioner General or his
officers and agents. This certificate is valid only for a period of
one month from the date of issue or for such further period as
specified in the certificate or can be revoked at any time. Its
validity will be deemed to have expired on the occurrence of any of
these events.
The Commissioner General may notify owners of aircraft or vessels or
their agents or representatives not to allow a certain taxpayer to
board their aircraft or vessel if he believes that person has
outstanding taxes and intends to or is making arrangements to leave
PNG. Such a notice may be issued to any of the airlines or vessels
operating in and out of PNG. The particular taxpayer may only be
allowed to board if he can produce a valid tax clearance certificate.
Any person who issues a boarding pass (for an aircraft or vessel) to
the taxpayer to leave PNG is in direct disobedience to the notice
issued and may become personally liable to pay the amount of tax that
is or may become due and payable by that taxpayer. In addition, he may
be convicted and fined for an amount between K400 and K1,000.
All persons who have allowed the taxpayer to board or given the
boarding pass to board an aircraft or vessel upon production to a tax
clearance certificate are required to lodge soon after the departure
of the aircraft or vessel the certificates and a list showing names of
persons taken on board the vessel or aircraft at that point of
departure.
A person who fails to provide the above details may be convicted and
fined an amount between K400 and K1,000.
The scenario discussed above is quiet different from the requirement
of a tax clearance certificate for purposes of remittance of funds
overseas.
The rules on foreign exchange controls have been relaxed quite
recently and there is no requirement for a tax clearance Section of
the IRC to find out what these countries are but includes Vanuatu and
Hong Kong.
The Commissioner General does get the opportunity to ensure that any
remittance overseas is not designed to evade tax and that the person
remitting funds has no outstanding tax obligations. However, this only
applies where the amounts to be remitted are in excess of K200,000.00
and remittances to tax haven countries and require clearance from the
IRC.
by MARK OPUR
