Commodity prices not reflected, says official

Business

EVEN though the commodity prices are doing well, Papua New Guinea’s mineral sector is not reflecting the expected revenue profits, an official says.
Internal Revenue Commission (IRC) assistant commissioner Sam Loi, in a recent interview with The National said this was not to say that companies in the mineral sector were not paying their corporate income taxes accordingly.
Loi made the statement when asked to respond to criticisms that some companies in the mineral sector were not paying their required corporate taxes to the state.
“Once a company makes a profit, it means that a company makes a sale, it meets its costs and after that it has its expenses,” he said.
“The net of that is when they declare whether they made a profit or a loss.
“That is where we calculate what should be tax deductible.
“We have to arrive at what is taxable income.
“Based on that, we’ll apply the 30 per cent (tax rate).
“If those steps are not taken and if they (critics) are making statements based on one general view, which can distort the analysis and the statement because a lot of these mining companies, to be fair, they are also capital intensive industries.
“They have what we call, under the laws, they are entitled to capital expenditure but over a period of time.
“In tax or accounting we call it amortisation of that expenditure.
“They take a portion for deduction purposes.
“Once we identify the risks and work out the plan then we can quantify the losses.
“In general terms, we are seeing that this sector (mineral), even though commodity prices are doing well, they have not been reflecting profits.
“Apply those general economic verses tax performance kind of comparisons, the perception is that maybe the industry is not paying the right amount and we can only do that when we do proper audit.
“That can be done through MRA (Mineral Resources Authority) and IRC working in collaboration because MRA has powers to get certain information.”