Wednesday 28 February 2024
The Internal Revenue Commission (IRC) has taken decisive action against a major mining company for engaging in a tax avoidance scheme and imposed a tax assessment of K11.79 million.
In revealing the results of an audit action, Commissioner General, Sam Koim, highlighted several incidences of visa violations and tax evasion.
He emphasized, “We are aware that foreign workers come on a work visa of one company but then end up working for multiple companies.
“We know that foreign workers are paid through their overseas/home bank accounts but are paid a lousy living allowance here in Papua New Guinea (PNG) to avoid taxes. To facilitate that, they sometimes sign two contracts.”
He added, “Our investigations revealed alarming discrepancies, including foreign workers entering on business visas to work in inline positions within companies, thereby avoiding paying the appropriate taxes due to the PNG Government.
“We have uncovered significant mismatches between the number of foreign workers holding work visas and the group employee declarations submitted to the IRC.”
To address these work visa-related tax evasion challenges, the IRC launched a project codenamed “Project Masta” to ascertain whether foreign workers and their employers comply with the tax laws.
In the instant case, the mining company, whose identity is withheld in accordance with Section 9 of the Income Tax Act due to ongoing appellate rights, sponsored employees under business visas despite their involvement in key positions within the company.
Such practices have hindered the accurate withholding and remittance of taxes owed to the IRC by the company.
The IRC conducted a thorough audit, including analyzing information provided by the PNG Immigration and Citizenship Services Authority (ICSA). About 1,187 employees covering nine years, beginning in 2015, were scrutinized.
“This is the first case since Project Masta was launched, and we are working collaboratively with the ICSA to take action against those found to have breached immigration and tax laws.
Employers and foreign workers are reminded to ensure they are properly authorized to work in the country and pay the right taxes.
The IRC is committed to enforcing tax laws and ensuring compliance to maintain fairness and integrity of our tax system.” Mr Koim added.