IRC highlights tax refund issue

By DALE LUMA
GOODS and services tax (GST) refund arrears has been one of the problematic areas for the Internal Revenue Commission (IRC), commissioner general Sam Koim says.
Koim told The National that a significant amount of revenue had been lost before 2019 due to unverified GST credits used to offset the salary and wages tax (SWT).
“Taxpayers would inflate their GST credits and knowing that IRC does not verify those credits, they would then conveniently request for those unverified credits to be traded with other tax debts,” he said.
The PNG Business Council raised the issue of unpaid GST reimbursements to businesses which it said was of a substantial amount with the mining and petroleum sector still owed around K1.3 billion.
Executive director Douveri Henao said the outstanding reimbursements go back three to five years.
“When a business overpays tax, the Internal Revenue Commission is supposed to refund it,” he previously told The National.
“The IRC hasn’t been doing that and subsequently there has been a large accumulation of (tax refunds).
“Last year, there was a very sensitive policy enacted by the Treasury which they called controlled payments.
“It means that instead of paying, for example salary and wages tax, they deducted (it) from the GST credit.
“That was applied last year because of the cash flow challenges businesses faced.
“Unfortunately, the IRC commissioner has made the decision not to continue that amnesty.
“The only difficulty in that position is that businesses are yet to make substantial improvements in their revenue.”
Koim, however, said prior to a decision he made in September 2019, a substantial amount of
revenue was lost through “unverified GST credits” being used to offset against salaries and wages taxes.
“When I switched this practise off, it resulted in us collecting K30 million extra every month,” he said.
“This contributed to the K300 million extra we collected last year.
“I do not have any appetite to go back to the time when taxpayers had a field day.
“Whatever, GST credit returns submitted by any taxpayer, it has to go through a proper audit before the taxpayer is refunded.
“Just because taxpayers submit a credit return does not mean that that is the amount outstanding nor does it mean they are entitled to receive a refund.
“We have instituted stringent measures to ensure that refunds are paid to the deserving.”