BEC receives the submissions on changing the taxation laws
The Bougainville Executive Council (BEC) has received the submissions on improving the new taxation laws in the region and is still yet to make a decision on the new changes.
According to the Bougainville Acting Chief Tax Collector Dr Aloyis Daton five taxation policy submissions contained information that is claimed to have a formula that is suitable for Bougainville’s business environment.
He said that the submissions are in line with the Sharp Agreement which is the governing principle for formulating the new taxation policy.
The submissions that were presented to the BEC for a decision on the change of the taxation law;
Submission 1: Future tax framework
- PNG’s tax system is inappropriate to Bougainville’s needs; compliance rates are very low.
- The Submission proposes that Bougainville’s future tax system will have less taxes, comprising of Goods and Services Tax, Personal Income Tax, Stamp Duties, Small Business Tax, Turnover Tax and a Production Levy for mineral sector.
- This system will be designed for ease of administration and compliance.
- To reduce the tax burden, Government will generate revenue from investing in businesses, examples include i) gold refining, ii) a superannuation fund and iii) a lottery.
Submission 2: Write offs of penalties for those in arrears
- 586 taxpayers in Bougainville owe PGK 49 million in taxes and penalties, PGK 31 million of this are penalties.
- Members of the Central Business Association have asked that tax arrears are written off, so that they can focus on compliance.
- The Submission recommends that the BTO encourages IRC to write off a share of the penalties and arrears, so long as businesses clear other outstanding debts and become compliant.
Submission 3: Replacing the planned Road User Tax with a Petroleum Products Tax
- The Organic Law allows for Bougainville to administer a Road Users Tax.
- This Submission recommends that the Road Users Tax be replaced with a Petroleum Products Tax, which will be imposed at the point of sale to the user.
- The rate could be between 3% and 10% of the cost of petroleum products, and revenue would be directed to funding infrastructure.
Submission 4: Liquor and tobacco sales (LTS tax) and goods and services tax (GST)
- The LTS is not effective, businesses do not comply and the Tax Office is taking legal action on some of those businesses in arrears.
- Businesses consider the application of LTS and GST as a form of multiple taxation.
- The Submission recommends that firms that pay LTS are exempted from GST, but that this would not have retrospective effect.
Submission 5: Amalgamation of all revenue functions into a Bougainville Revenue Service
- This submission recommends that all current and future tax and non-tax revenue functions be amalgamated into a Bougainville Revenue Service.
- This Service would house tax, customs, liquor licensing, road transport, motor vehicle inspection and investment promotion functions, among others.
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