Govt faces tax challenges

Business, Normal

The National, Tuesday September 29th, 2015

 AS Papua New Guinea’s construction industry, manufacturing, agricultural and services sectors are all much larger than before, it brings a different set of challenges to tax administrators and officials, Treasurer Patrick Pruaitch said.

He spoke at the opening the 12th Pacific Islands Tax Administrators’ Association (PITAA) annual meeting in Port Moresby yesterday, saying the size of the PNG economy had doubled in the last five years. 

“While the resources sector remains the largest segment of the economy, many others have enjoyed complementary growth,” he said. 

“Successive PNG governments have always been concerned at the relatively narrow tax base we have, which made GST (goods and services tax) a big and major step forward in terms of broadening the tax base and, to some extent, simplifying the tax collection system. “It is for this reason the PNG Government last year commissioned a far-reaching review of our whole tax, customs, excise and other revenue systems.”

Pruaitch said results of the tax review were due to be handed to him shortly. 

“I am sure this will mean further change for our revenue agencies and our taxpayers.

“Having said that, I must admit a certain level of discomfort at some of the public debates on what was projected as likely tax review outcomes. 

Lately, there have been suggestions the review will recommend a reduction in our current 30 per cent corporate tax rate. “Many countries are doing this to improve their attractiveness as a destination of domestic and foreign investment. 

 “It is premature for me to comment on the tax review. “However, it is important to note that in a jurisdiction such as ours and indeed in many countries, the biggest portion of Government taxes come from personal income tax; essentially from the people employed by corporations. Company tax is a close second. 

“In PNG, a big proportion of company tax comes from a relatively small number of companies.”