Tax law prevents full compliance with EITI

Caption: Panelists of the Tanim Graun Q&A show






By MATTHEW VARI

Sunday, August 3, 2014 (PNG)






SINCE PNG’s acceptance into the Extractive Industries Transparency Initiative (EITI) in March this year as an EITI candidate for the global initiative for openness in the management of revenue from natural resources, the country still has barriers like tax laws that prevent the full disclosure of revenues from various resources companies.

With three years given for the country to implement the EITI standard, meeting the requirements to be a fully compliant member are still being worked on as revealed by the Commissioner General of the Internal Revenue Commission (IRC) Betty Palaso.

The IRC comments came in response to concerns raised by internationally recognized writer and blogger Martyn Namorong on requirement by the EITI on disclosure of tax revenue from resource projects during the Tanim Graun question and answer television program last week.

Focus of the Q&A session was on revenue transparency, perspectives of government, civil society, and industry in light of the expected benefits of the PNG LNG project.

Namarong asked if there were moves by the government for amendment to the tax law to accommodate the level of transparency required by being a EITI member.

“From the taxation perspective the EITI obviously involves disclosure of tax information which under current legislation may by some difficulties, and I understand there is a tax review currently underway,” Namorong pointed out.

“Are you looking at disclosure through amendments to the tax act to allow for the process of transparency in the reporting and access particularly in relation to resources sector?”

The IRC Commissioner could not confirm amendments to the tax act, however, confirmed that the review was still underway and agreed on the hurdles of the law that prevented disclosure of revenue sources and specifics.

“The tax review is still going on and it hasn’t completed its task yet, but it is an issue because in the tax act, there is a provision there that prevents the IRC from giving out details of taxpayers,” Ms Palaso said.

“But I think through the EITI process we are trying to get some of the details out.”

“From the income tax perspective it will also require the support and agreement of the taxpaying companies in the resource sector to allow us to release and disseminate any details.”

Palaso stated that all the tax revenues collected were made public in terms of revenue heads, available in the publication of annual reports, and are included in the annual budget documentation.

“We do publish details about the tax revenues we collect except for particular details of taxpayers and companies,” she said.

PNG is among 45 countries globally that are adopting the EITI initiative, which it is among 16 that are aiming to meet requirements for fully compliance status.

The EITI is a global coalition of governments, companies and civil society working together to improve openness and accountable management of revenues from natural resources for the benefit of the people that own them.

Countries that implement the EITI Standard are expected to ensure full disclosure of taxes and other payments made by oil, gas and mining companies to governments.

These payments are disclosed in an annual EITI report that allows citizens to see for themselves how much their government is receiving from their country’s natural resources.