Porgera mine tax debate

By GYNNIE KERO and SHIRLEY MAULUDU
INTERNAL Revenue Commission (IRC) Commissioner-General Sam Koim says the “old Porgera” tax issues relating to Barrick (Niugini) Limited should not be used as an excuse to delay the reopening of the Porgera mine.
He was reacting to a statement by Prime Minister James Marape this week blaming the delay in the reopening of the mine on a “tax issue”.
“We are almost there. There is just a tax issue standing in the way of Porgera being reopened,” Marape said.
Last week, Barrick chief executive officer Mark Bristow gave an ultimatum to the State parties to resolve all outstanding issues by March 31.
Koim said yesterday Bristow did not mention what “outstanding issues” were holding up the reopening of the mine.
“I cannot discuss the specifics of an ongoing tax matter (but) suffice to acknowledge that Barrick has a tax dispute concerning the old Porgera,” he said.
“The matter is at the conclusion stage of the tax dispute resolution process of the IRC, and lawfully, if the decision of the Commissioner-General still aggrieves Barrick, the taxpayer can exercise its rights to seek recourse in the next appellate process.
“That process is not unique to PNG and exists in all countries Barrick operates in.”
The National understands that there was a clause inserted in the New Porgera framework agreement in which the resolution of Barrick’s old tax liabilities was a condition for reopening the mine.
Koim said “that provision contravenes the provisions of the Income Tax Act and to that extent is unenforceable from the rest of the agreement”.
“And Barrick knows that very well,” he said. “In the present case, Barrick insists that the IRC accepts its position, even if it goes against the grain of the law.
“It seems Barrick is seeking a political solution to its legacy tax problems, some of which are very technical matters even for non-experts like me to understand.”
Koim thanked PM Marape and the Government for being “forthright in informing Barrick that the IRC independently administers tax matters, and the Government is not in the business of breaking its own laws”.
“The Government is very conscious of setting a very bad precedent,” Koim said.
“Barrick should not use the pressure of reopening the mine to force the Government to address its tax problems.
“The mine should reopen immediately while Barrick addresses its ‘old Porgera’ tax liability following the due process of law.
“We hope that Barrick is sincere and acts in good faith to resolve this matter using due process of law.”
Last night in response, Barrick (Niugini) Limited (BNL) said it was “deeply disappointed that the Commissioner-General of the Internal Revenue Commission has chosen to speak publicly about a confidential tax matter.
“The Income Tax Act requires that officers of the Internal Revenue Commission, including the Commissioner-General, treat as confidential the information and tax affairs of all taxpayers.
“BNL would expect the law to be observed by holders of high office.
“BNL has always administered its financial affairs in accordance with the laws of PNG and believes the matter should be dealt with in accordance with the law and obligations of fairness and confidentiality.”
Koim declined to disclose the amount of tax owed by Barrick. It is understood that the tax audit was conducted in 2013.