Reform applies to high-risk businesses: Koim

The National Business

THE proposed cash transaction threshold will only be applied to certain “high-risk” industries and businesses, according to the Internal Revenue Commission (IRC).
Commissioner-general Sam Koim was responding to public debate on the announcement to propose a cash transaction threshold.
Koim said the reform would provide a framework to address tax evasion and increase collections as part of plans to become a robust, modern and efficient tax administration by 2025.
“We are not alone in this step,” he said.
“France, Spain, Italy and, recently, Australia, have introduced similar reforms and are reaping the benefits.”
Koim said tax evasion was one of the biggest challenges the IRC faced and a significant number of taxpayers in tax evasion schemes operated in the “black economy”.
“They predominantly use cash to conceal their transactions and remain under the radar of the tax authority,” he said.
“Cash does not leave an audit trail hence it makes it difficult to audit and hold these operators accountable.
“That is the area we are trying to address but it has other benefits too.” Benefits of the proposed reform include:

  • ENABLE the fight against fraud, bribery and corruption;
  • HELP curtail money laundering;
  • CURTAIL tax evasion;
  • DISPARITY in reporting;
  • ENABLE combating unexplained wealth; and,
  • CREATE an even business environment. “The initial thinking is that the cash transaction threshold will not apply to all businesses or sectors,” Koim said.

“We will apply to certain targeted industries or businesses we consider as high-risk.
“Those who claim that many Papua New Guineans are illiterate and operate in cash are proffering a lame excuse and are ignorant of the facilities such as electronic transfers, Eftpos payments and SMS banking facilities available.
“Cash is also a major security risk in this country so this would help.”