Bank of PNG supports government review of tax concessions

TAX concessions granted to developers of major projects in the country have resulted in lower forex and tax revenue to the Government, Bank of Papua New Guinea (BPNG) says.
In its Monetary Policy Statement released this week, Governor Loi Bakani said the current policies in relation to the extractive industries gave a lot of tax concessions to project partners for the development of major projects.
Bakani said BPNG supported the Government’s medium term revenue strategy from 2018-22 to review tax concessions.
“It is the Bank’s (BPNG) view that the Papua LNG and Wafi Golpu projects be included in this review so that much needed revenue for the Government can be raised,” he said.
The statement further noted that the increase in export earnings and the continued current account surplus has not translated into a significant increase in foreign exchange inflows into the foreign exchange market.
In total, PNG’s export earnings should more than adequately cover all the demand for foreign currency.
This however according to BPNG was not happening as various Project Development Agreements allow developers of the various extractive industry projects to have foreign accounts offshore.
Most of the export earnings in foreign currency were held in offshore accounts and do not enter the foreign exchange market, the bank said.