IRC gives employers tax options

The National Business

By SHIRLEY MAULUDU
THE Internal Revenue Commission (IRC) is providing options to employers who want to have reduction in taxes for their employees made redundant.
IRC Commissioner-General Sam Koim was responding to queries by The National on whether the commission would entertain requests by some employers to consider tax reductions for their employees who had been laid off. “The Government is aware that the Covid-19 has had adverse effects on many industries, resulting in job losses and downsizing of operations,” Koim said.
“In order to help reduce the pain to employees suffering job losses, the IRC has advised that there are options open to employers granting a reduction in taxes for employees made redundant.
“Approved redundancy schemes’ allow employers to take advantage of reduced rates of tax on payments made to employees, as a result of being made redundant.”
To qualify for the reduced tax, Koim said the employer should pay up to K50,000 to the employee.
The employer will pay 15 per cent tax (normally 42 per cent tax) if the payout is K50,000. There must be at least 30 employees made redundant to qualify for the reduced tax.
“The Internal Revenue Commission has a taxation circular available on the IRC website that explains how to apply and what criteria need to be met, in order to qualify for the ‘approved redundancy scheme.”
On the 2,700 workers of the Porger gold mine recently made redundant, Koim said “applications were made and about 1,549 staff were approved to have met the eligibility requirements under section 46CA of the Income Tax Act.”

7 comments

  • IT’S MENTIONED IN THE TAX LAW AND EMPLOYERS THROUGH THEIR NATIONAL HR OFFICERS AND ACCOUNTANTS SHOULD UNDERSTAND THAT AND INFORM MANAGEMENT TO APPLY TO IRC SEEKING COMMISSIONER’S APPROVAL FOR FACILITATING REDUNDANCY SCHEME. UPON COMMISIONER’S APPROVAL, ALL EMPLOYEES LEAVING EMPLOYMENT UNDER REDUNDANCY WILL BE TAXED 15% OF THEIR FINAL ENTITLEMENTS. CALCULATIONS FOR REDUNDANCY PAYMENTS ARE ALSO CAPTURED IN THE TAX REGULATIONS. THE SCHEME AS ALREADY MENTIONED IN THE TAX ACT SHOULD BE MORE THAN 30 EMPLOYEES

  • Can you as a commissioner sit down on your chair, discuss with your team and the National government and the minister responsible to reduce salary and wage tax? It is killing the ordinary papua new guineans.,
    This country is not doing any good for the poor people, not creating jobs and yet they are claiming 42% tax plus many other hidden taxes from the poor people of this country.

  • PNG’s Income Tax is one of the highest in the World. and it is one of the Main Revenue generators for Government. The government is penalising the workers who have formal wages and salaries earning through which the Income Taxes are deducted to make up for the potential taxes it could collect from the informal sector, buai sellers, table mamas, etc. Having said the above , I support the idea that Income tax should be reduced from the maximum threshold level of 42 percent down to 25 percent for those employees earning less than K100,000 a year.

  • EMPLOYEES NEED ACTION NOT JUST TALKING ABOIT IT.
    When will the government or IRC reduce the tax rate?

  • Sam its being some months since you were given that post; and it seems you are like Haman not Esther.

  • why cant our Government implement the Tax scheme system similar to the biblical way, the 10 10 system or the tithing system, the government gets the 1/10th of every proceeds and the citizens get the remaining 9, after all with these vats on consumables goods the government still gets other taxes indirectly

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