Expert for highway tax credit scheme

PRICEWATERHOUSECOOPERS is concerned that the Government has not extended the Highlands Highway tax credit scheme despite requests from many industry groups.
Tax partner for PricewaterhouseCoopers David Caradus made the remarks in his commentary on the 2008 Budget at the Budget breakfast gathering of businessmen at the Holiday Inn.
He said the Highlands Highway was a vital transport link for over 40% of country’s population and from 2002 to the present, resource companies had spent a lot in keeping and improving the highway.
Mr Caradus asserted that the tax-related announcements in the 2008 National Budget had limited impact for many individual and businesses in the country.
Mr Caradus said PricewaterhouseCoopers considered that the items were announced as part of the budget in terms of policy development but where not included in the budget.
“PricewaterhouseCoopers will support efforts to reintroduce this scheme in the future after the Government addressed the ‘administrative and capacity issues’ that the budget papers cited as the reason for not renewing this tax credit scheme,” Mr Caradus said.
He added the budget papers indicated the Government would seek to limit tax concessions afforded to new projects to those available under existing law in the interest of promoting “neutral and equitable treatment of projects” and “transparency in tax policy”.
Mr Caradus said PricewaterhouseCoopers would support this policy stance provided the Government would take adequate steps to ensure existing laws adequately addressed the fiscal needs of new projects.
He added that the existing law would have to be amended from time to time to provide for the new industries not currently considered in the existing law.
Another concern Mr Caradus raised was the Government’s continued policy of imposing management fee withholding tax on services provided wholly from outside PNG, whether or not the recipient of the management or technical services was an associate provider.
He added that the imposition of a tax in PNG on a non-resident for services rendered entirely outside PNG appears to be contrary to globally accepted taxation policies of only imposing tax on non-residents where they derive income from a source in the country in which the tax was imposed.
“PricewaterhouseCoopers also noted that management fee withholding tax cannot be imposed where the services were provided from Australia, Singapore, Canada or China and the current rules provided an unintended bias to obtain services from residents of these countries,” he said.