A TOTAL of 20 logging companies in Papua New Guinea are currently being audited to address Tax Compliance issues.
IRC Commissioner General Sam Koim revealed this in a statement today.
Mr Koim said Internal Revenue Commission (IRC) turns spotlight on logging companies to allow for Goods and Services Tax (GST) Refund Claims to be subjected to comprehensive audit.
He said the logging sector has been one of the delinquent sectors in so far as tax compliant is concerned.
“Not only that, they have been one of the most refunded sectors when it comes to GST refunds,” Koim said.
The Commissioner General said the IRC considers this as one of the high-risk sectors requiring attention and hence scaling up its compliance activities.
He said around 20 logging companies are being audited and based on the audit, several actions will be taken, including criminal prosecution.
“Over the years, logging companies have barely paid corporate income tax. The group salary and wages taxes they pay are very minuscule compared to the labour-intensive nature of their operations and the export income they derive.
“It is like they are telling us (tax office) that they are on a serious diet, yet they are putting on a lot of weight out there. We want to get to the bottom of this,” Mr Koim said.
The Commissioner General added that despite them not paying their fair share of taxes, they have been asserting their “exporter” status to claim and received a lot of GST refunds over the years.
He said the export of goods or services is considered as a zero-rated supply hence the exporting business such as log exporters, will not pass the GST to the ultimate consumers who are based overseas.
“This renders them to be in a credit position most of the time for refund purposes.”
“But, how can one continue to be in business if they make losses every year? How can one continue to be in business if their overheads far exceed their income,” Mr Koim pondered.
“Given the evasive pattern of behaviour and the risks posed by the logging sector, all claims for GST refunds will be subjected to a comprehensive audit.”
Meanwhile, Mr Koim stated that this exercise will see some more logging companies be added to the list of 20.
My name is Willie Nilmo and Im the Company Secretary for a Land Owner Company Who Have Established a Join Venture Partnership Arrangements with the Current Investor Partners to Use FCA Permit Guidelines to Cut Logs and Go Into Large Scale Oil Palm Development along the Sepik Plains.
Since the Establishment of This Project we the Landowner Company have Noticed that they(Investors) are Not Consulting us in all the Work they Are Currently Doing in the project Area
Therefore I would like to have an Audience With the IRC Team authorised By the Commissioner to Present our grievances For Investigation Purposes
Thank You
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