K90m being claimed by firms under tax scheme

By LEMACH LAVARI
An average of K90 million tax from companies is not received by the Government as revenue annually, according to Treasury.
This money is claimed by companies under the infrastructure tax credit (ITC) scheme, says first assistant secretary of macro-policy Andrew Oaeke.
He said this in a presentation at the ITC scheme workshop yesterday in Port Moresby.
Oaeke said the figure was expected to increase as companies’ profits increased.
The guidelines of the ITC allowed for companies in mining, petroleum, agriculture and tourism to participate in the scheme.
Companies that are in the exploration phase cannot participate in the scheme.
For mining and petroleum companies, a limit of 0.75 per cent of annual income can be spent on projects through ITC.
Those in agriculture and tourism are allowed 1.5 per cent of their annual income.
What these companies spend on projects through ITC is then subtracted from the annual tax they owe to the government.
Oaeke said from 2013 to 2017, the total approved projects under the ITC was over K1 billion.
The actual amount spent on projects was K608.2 million while K341.8 million was claimed by companies.
“This amount could have been spent through Government budget priorities, but was spent outside of the budget process through ITC,” Oaeke said.
He said if companies spent less than the limits set for a particular year, their excess could be carried forward for a period of two years.
In cases where companies overspend in a particular year, the extra amount may be carried forward for an indefinite period.
Oaeke said this reduced the Government’s revenue every year.
He said treasury took this reduction into account when planning annual budgets.
“However, there needs to be close consultation between Treasury, Internal Revenue Commission and the Department of National Planning and Monitoring to ensure ITC projects do not reduce Government revenue,” Oaeke said.