Small businesses avoid tax: IRC

By SHIRLEY MAULUDU
SOME small business operators are making money but are depositing them into their personal bank accounts, according to Internal Revenue Commission (IRC).
Commissioner-general Sam Koim said this was a practice identified in consultation with banks.
Koim said this was an issue that IRC was planning to address as it embarked on initial processes of rolling out small business tax (SBT) to make it easier for small businesses to operate and expand.
He was speaking at IRC’s first meeting with various stakeholders in Port Moresby yesterday to make them aware of the new tax law (SBT) that was initiated in 2019 by the Government.
“We (IRC) want to encourage you to be strict businessmen and women,” he said.
“If it is business money, it is business money.
“In the long run, we would like for you to have strict discipline.
“This has to start somewhere so we have the small business tax regime that was introduced in trying to bring in the untaxed people into the taxing net.
“People are making money and they are depositing the money into their personal bank accounts routinely.
“We have identified some of those people and have approached them.
“We are trying to simplify the tax regime.
“So (if) your turnover is below K60,000, then you would probably be paying about K250 in one year.”
Meanwhile, according to IRC, SBT applies to an individual who conducts business as a sole trader.
The small business tax regime was introduced in 2019 and is expected to come into operation in April soon after gazettal and is aimed at making it easy for micro and small businesses to comply with the tax law.
A sole trader must satisfy these conditions to qualify as a small business taxpayer.

• Be an individual;
• Not a salary or wage earner;
• Business operated solely in PNG;
• Business income earned must be below K250,000 in a year;
• Must not be registered for goods and services tax;
• Not registered for income tax in the previous year (new registrant); and,
• Not in the business of providing professional services.

Professional services refers medical, dental, legal, accounting, financial, managerial, engineering, architecture, consulting or other similar services.