Firms warned to pay tax

COMPANIES in the resource sector found to be paying incorrect tax to the Government will be held to account, according to the Internal Revenue Commission (IRC).
Commissioner-General Sam Koim indicated to The National yesterday that companies would have to pay their fair share of tax.
The IRC is investigating at least two companies from the resource sector.
“We have been profiling these two companies (names withheld for confidentiality reasons) for over a year,” Koim said in the statement.
“We understand that mining is a capital-intensive operation and requires significant investment.
“Be that as it may, our mineral resources are finite and non-renewable, and we will run out one day.
“The Government needs to extract a substantial proportion of the value of the resources extracted for the benefit of its citizens, present and the future.”
This involves the design and implementation of an appropriate contractual and fiscal system.
“The one we have is a concessionary fiscal regime where, amongst others, mining companies pay taxes if they make a profit.”
The regime creates higher incentives for operators to inflate their costs in order to reduce their corporate income taxes.
Koim said: “Whilst the Government is negotiating better deals for our people in the new mines, IRC has a responsibility to ensure that the existing mines are paying their fair share of taxes.”
PNG has a self-assessment tax regime where the taxpayer assesses its own liability, declare that on oath to the tax office and pays on time.
“That is the tax regime that predominantly exists all over the world where most of these multi-national corporations operate,” Koim said.
“If the tax office considers that the taxpayer has made false declarations or substantially reduced the liability without justification, the tax office audits that taxpayer with a view to amending the assessment.
Koim assured the taxpayers “we are not introducing a new law but simply enforcing the existing laws”.