Papua New Guinea Chamber of Commerce & Industry

Withheld tax ‘heinous’

PAPUA New Guinea Chamber of Commerce and Industry president John Leahy says the non-remittance of salary or wages tax is the most heinous of all tax defaults.

“When an employer pays the net amount of the employee’s pay and does not remit the tax deducted to the Inland Revenue Commission (IRC), it is a (criminal) breach of trust, tantamount to stealing.

“Such employers or companies are, in effect, stealing the money and using it to provide working capital for their business operations or working capital,” he added.

Leahy was responding to The National’s request for comments on IRC’s revelation that some companies and State-owned enterprises had failed to remit personal income tax deductions of employees totalling K1.8 billion since 2014.

IRC commissioner-general Sam Koim made the revelation on Wednesday when announcing a three-month penalty amnesty on salaries and wages tax from January to March.

Applauding the IRC’s move to clamp down on such errant employers, Leahy stressed that reputable businesses, often members of their local chambers of commerce, did not engage in such errant (even criminal) practices.

“We are therefore subject to a competitive disadvantage compared with the ‘spivs’ that do such things,” he added.

While supporting the general approach initiated by the new IRC commissioner-general, Leahy said: “PNGCCI stills thinks the IRC is getting it seriously wrong.

“The figure of K1.8 billion is very substantially understated.
“It is much more than that.

“The problem is that the IRC only targets those taxpayers that they have in their systems.

“Tax avoidance and evasion is mostly by companies or businesses that are not registered with the IRC.”

Leahy reiterated its calls to the IRC to implement a project to bring non-compliant businesses into the system.