Have you wondered why Papua New Guinea is facing serious cash-flow problems?
We know that the Government collects most of its internal revenue through the taxation laws it has in place. However, like any other legislations/laws of the land, just how effective and functional are these taxation laws – particularly in terms of its administration and compliance/ enforcements?
Due to the lack of effective enforcements and monitoring or either through systematic bribery and corruption with officials, most SME businesses owned and operated by foreigners are not paying company income and profit taxes as they are required to do under these laws.
Most of these shops, tyre services and other business activities are using counter GST receipting cash registers.
Most are not banking their cash collections.
Instead they have their own vaults and cash safes at their premises or in secluded places and only deal in cash transactions.
The banking system is too cumbersome and costly.
The other big-time loss for Papua New Guinea is that many multinational corporations operating here are very smart at hiding profits.
Their books may tell you how much they make in a year but are they being checked and cross-checked?
No wonder PNG has so much and yet loses out through poor revenue collections.