Corporation, IRC partner to enhance tax compliance

Business

By SHIRLEY MAULUDU
THE Small to Medium Enterprise Corporation (Smec) and Internal Revenue Commission (IRC) have stepped up their efforts to enhance tax compliance and enforcement activities through data sharing.
This will be achieved through a memorandum of understanding (MoU) which was signed between the two entities in Port Moresby yesterday.
“There is a lot of appetite and conversations about SMEs,” IRC commissione-general Sam Koim said.
“As a tax administration, one of the things that we are observing is that a lot of our people are new to this concept of doing business.
“We see a lot of people emerging to do business in a small way.
“Therefore, the concept is new to most and most of them are failing even before they start, while some of them start well but fail half way through, and others are doing really, really well but do not comply with the regulatory requirements and business environment that they are operating in which of course includes tax and requirements for the IPA (Investment Promotion Authority) and so forth.”
Koim said there was still many small business owners who were not fully aware of the regulations.
“In that space, I think the partnership that we are forging will go a long way,” he said.
“We will share insights and information together with the aim to reach as many taxpayers as much as possible as well as the public in terms of what IRC does.”
Smec managing director Petrus Ralda said a lot of small businesses had indicated that they were reluctant to formally register their businesses.
“Responding to our surveys, we have found out that most of our SMEs are reluctant to be registered formally because of the amount of tax they have to pay,” he said.
“What we are now trying to do is to create an environment that is conducive and to formalise the economy right from the wards and districts.
“We are running a couple of programmes right now.
“A research report done by CIMC (Consultative Implementation and Monitoring Council) said 85 per cent of the informal sector cash flow is about K12 billion.
“The government is missing out on this in terms of tax.
“So the first thing we as an entity would like to do is to change the mindset of the people – the 85 per cent of the population.”

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