Changes on tax a concern

Business

By MARK HAIHUIWE
THE Lae Chamber of Commerce Inc is concerned about the Government’s decision to change the rates of the dividend withholding tax and the adverse implications which may stem from it.
Chamber president Alan McLay told The National that the changes on tax as announced in the 2017 budget could be “counter-productive” to business development.
“While the change of rates is standard, there are some other changes which have potentially significant impacts,” McLay said.
“One area of concern is that dividend withholding tax is no longer a final tax for individual and foreign shareholders.
“Since 2006, those receiving dividends that were subject to withholding tax would then have no other tax to pay. However, the new rules look like this is no longer the case.
“Now dividend recipients need to file a tax return and pay a top-up tax based on their situation. This proposal impacts both small individual shareholders in POMSox (Port Moresby Stock Exchange) listed companies like BSP or Oil Search, as well as small business owners that operate their businesses through companies.
“You could argue that this change is unlikely to encourage owners of micro businesses or those operating in the informal sector to regularise their affairs through registering a company with the IPA.
“In turn this would mean that small businesses will be less likely to be able to access credit or participate fully in the economy.”

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