Loyal Associates

Balancing Tax Burden and Revenue Growth: The IRC's Pragmatic Approach

Papua New Guinea's tax system has long been a challenge, with a heavy burden on taxpayers and concerns about the ability to maintain revenue.

IRC understands the challenges faced by taxpayers and has been taking strategic measures to improve tax administration to boost tax revenue without increasing tax rates.

As such, IRC Commissioner of Tax, Mr. Samuel Loi participated in the recent MINDS-MEET Forum Panel Discussion held on July 5th, 2024, in Port Moresby. The event focused on reforming PNG's tax regime to alleviate the tax burden without compromising revenue.

Mr. Loi was part of a distinguished panel including Deloitte Managing Partner - Mr. Herbert Maguma, Senior Research Fellow & Program Leader - Dr. Francis Odhuno, and Principal SBC Solutions - Naime T. O'ome.

The key topics covered during the panel discussion included:

-Existing Taxation Policies and their implementation with a view to creating more space to regulate the informal sector
-How the Government can reduce Salaries and Wages Tax without affecting overall tax revenue
-Existing Tax Bases and possible opportunities to increase these Tax Bases
-Current Tax Holiday regime and their implication on the
overall Tax Revenue

The panel, comprising professionals and academics, offered views on potential policy options for reforming Papua New Guinea's tax regime based on global best practices and theoretical approaches.

Mr. Samuel Loi however, highlighted that while the IRC does take onboard the policy interventions discussed, the commission also considers the practical approach currently undertaken that has seen substantial tax revenue growth over the last 3 years under the leadership of Commissioner General Sam Koim. This has been achieved through effective collection and improving source collection mechanisms.

In his presentation, Mr. Loi covered the IRC's 7 strategic pillars and main priorities, including the revenue trend over the last 20 years. This data demonstrates that revenues have grown significantly without any major tax rate increases.

Mr. Loi stated that the IRC expects revenue growth to continue in the near future and medium term. However, this growth will not come from raising tax rates.

Instead, the focus will be on leveraging the IRC's strategic administrative interventions to enhance tax collection and compliance efforts. This pragmatic approach aims to generate more revenue by optimizing the collection of existing taxes, rather than increasing the tax burden on citizens and businesses

Photo credit: PNG Christian Professionals Network

CHIMBU PROVINCIAL GOVERNMENT PRESENTS K6.7 MILLION CHEQUE PAYMENTS TO IRC

On July 9, 2024, the Chimbu Provincial Government (CPG) led by Governor Hon Noah Kool and Provincial Administrator Mr John Punde, along with Senior Officials, showcased their dedication to tax compliance. They presented cheque payments totalling K6.7 million to the Commissioner General of the Internal Revenue Commission (IRC), Mr. Sam Koim, at the IRC Revenue Haus Office in Downtown Port Moresby. These payments were attributed to GST Section 65A deductions or withholdings covering tax periods from March 2023 to June 2024.

The Senior Officials from the Chimbu Provincial Government commended Mr Koim for his leadership and strategic vision in introducing the GST S65A initiatives, which had led to increased collections and transformative changes within the Internal Revenue Commission.

The Chimbu Provincial Administration, in conjunction with the District Development Authorities (DDAs) in Chimbu Province, adhered diligently to the GST Section 65A directive issued by the IRC, thereby fully remitting the GST S65A payments. The improved GST S65A collections from Chimbu had boosted internal revenue for the province as 60% of the total GST collected from the province is remitted back to the province. Since the implementation of the Section 65A directive, Chimbu province had doubled its internal revenues.

During the meeting, CPG Officials emphasized the necessity for awareness and tailored training on GST Section 65A and taxation in general within Chimbu Province. The IRC team committed to collaborating with the CPG and DDAs to conduct the requested training session and make necessary preparations. The team also raised concerns about taxpayers conducting business operations in Chimbu while their business headquarters are located in another Tax Centre, leading them to lodge and pay taxes at their headquarters.

The Commissioner General assured the team that through a taxpayer mapping exercise and data cleansing by the IRC Data Team, it was discovered that Chimbu has 67 mapped taxpayers, with 43 being active filers and 24 inactive. The CG pledged to collaborate with the Chimbu Provincial Administration through the IRC Kundiawa branch to reactivate the 24 inactive taxpayers.

Despite challenges, the Chimbu Provincial Government, under the leadership of Governor Mr. Kool and Provincial Administrator Mr. Punde, displayed outstanding teamwork by closely collaborating with DDAs to effectively implement the GST Section 65A directive. Their joint efforts underscore the importance of inter-agency cooperation in promoting tax compliance and revenue generation for community development.

The introduction of GST Section 65A at the subnational level is designed to address significant tax compliance gap amongst Government contractors. Entities that received the lawful directive are urged to comply and help IRC collect taxes. “Government entities must not only become big mouths to be fed (spending agencies) only, but also help in making the money through mechanisms like this.” Mr Koim added.

This significant action by the Chimbu Provincial Government showcases its commitment to upholding tax regulations and contributing to the province and the nation's overall development.

Authorised for release

Mr. Sam Koim, OBE
Commissioner General
Internal Revenue Commission

Notice.

I have now resumed the business registration services, which include the following:

1. Business Name Registration
2. Company Registration or incoporation
3. Registration of an Association
4. Registration of other entities, like business groups, etc...

So, if you need my services, please let me know in the comment section, or you can inbox me.

Hi everyone!
I've been in hibernation for quite a while. So, now I'm back.

It is a new year, we all have resolutions, dreams and goals to achieve this year. If it's your goal to register a Business Name or incorporate a company this year you can always talk to us. We will help you achieve your goal.

IRC INITIATES SMS MESSAGING WITH TAXPAYERS

In a latest drive to communicating tax messages to taxpayers using technology, the Internal Revenue Commission (IRC) has taken on board the use of SMS text messaging to Small Business Taxpayers.

The Small Business Tax (SBT) law, an initiative of the Marape Government, was passed by Parliament in 2019 by amendments to the Income Tax Act, 1959. The Small Business Tax (SBT) came into force in June 2021. The SBT was aimed to reduce the compliance burdens of micro and small businesses and to attract them into the formal environment.

Since then, IRC has held workshops and awareness campaigns throughout the country on the benefits of SBT. The onset of COVID -19 and its ongoing threats and restrictions has disrupted the continuations of the SBT awareness campaigns.

In a positive twist to the impact of COVID, however, the IRC is joining many other organizations and tax administrations throughout the world by embracing new waves in technology through digitization and stepping up in communication using electronic means to interact with taxpayers and the public.

We are progressing to the path of one day becoming paperless; meetings with our stakeholders are run virtually and communication with taxpayers is email based. Our latest drive is to use the mobile phone to communicate with taxpayers.

The IRC has started using SMS messaging to contact with registered SBT Taxpayers who do not have access to emails. This approach is based on the feedback received during the awareness that most Small Businesses prefer communication through text messaging.

The SMS is to remind Small Business Taxpayers of the due dates for payment of SBT.

Due date for filing and payment is the 28th day of the following month after the end of each quarter.

To date there are almost 700 registered SBT Taxpayers who will be receiving SMS messages from the IRC SBT Number 71929040: Similar to the successful Generic emails to all 20,000 plus taxpayers, the SMS message will contain Short SBT reminders and announcements.

Authorized by

Sam Koim, OBE
Commissioner General

7th Dec 2021

Are you behind your taxes? Would you want to be compliant and have your tax obligations updated and in order? Or, If your outstanding tax lodgements are dated years back, you can always talk to us. We will help you solve your problem. Loyal Associates is now providing the following services: Preparation of;
* Goods and services Tax Returns (K250)
* Salary & Wages Tax Returns (K250)
* Individual Tax Returns
* Company Tax Returns
* Application for a TIN (K150)
* Other tax types

Other services include;
* Registration of Business Names (K250)
* Incorporation of Companies (K650)
* Incorporation of an Association (K200)
* Registration of other entities

Should be interested in one of our services, you can contact us on mobile number 70235246 or email us at [email protected].

KINA BANK - SME UNSECURED LOAN
# # # # # # # # # # # # # # # # # # # # # # # # # # # #
Description: An Unsecured loan for businesses related purposes tailored to help support
long term growth for Small Medium Enterprises
Loan purpose: Business growth investment purposes
Prime security: Unsecured, no security required
Loan amount: K50, 000 to K100,000
Minimum term: 1 year - 7 years. Term to align with the loan purpose and life of asset being financed.
Interest rate 4% p.a.
Repayment frequency: Monthly
Loan Establishment Fee; K2,000
SME Loan Line Fee: 0.30% p.a. of the Outstanding Loan Balance, charged quarterly (Min. charge K75 per
quarter)
Minimum Eligibility Requirements
___________________________________
✔PNG owned company/business – business must be 100% citizen owned.
✔Maximum Turnover PGK5mil p.a.
✔Minimum 2 years trading (validated by bank statements and other documents such as tax returns)
✔12 month projections with assumptions
Effective July 2021
Things you need to know:
❗Applications are subject to Kina Bank’s normal credit approval.
❗The minimum loan term is 1 year.
❗ Full terms and conditions will be included in the loan offer.
❗Fees and charges apply and are subject to change without notice.
Fees removed by Kina Bank include:
✔Upfront Application Fee-K200
✔Documentation Fee-K150 per loan
✔Cheque Processing Fee- K200 per Loan (up to 5 cheques). Additional cheques K50 each
✔Inspection Fee-K300 per property
✔Drawdown Fee – K200 per Drawdown
✔SME Loan Maintenance Fee- As Advised, Charged Monthly (Min. charge K350 per month)
✔ Settlement Fee- K200 per Loan
✔ Discharge Fee – K500
Will post the requirements for KINA BANKS SME BUSINESS SECURED LOAN ANYTIME THIS WEEK
GOOD LUCK!!

Another successful registration of a Business Name today.
Congratulations to Afred Malisa from Kimbe for the successful registration of your Business Name, Alcon Building Construction. Wish you success in business.

Financial Literacy.
What is Small Business Tax?
Why should you register for SBT?
Click here to download pdf versionhttps://irc.gov.pg/wp-content/uploads/2021/08/Small-Business-Tax.pdf

LA is again happy to announce the successful registration of two Business Names, Leoht Agro Services for Moses Yale, Kimbe and Parabudu Agro Services for Narata Nalau, Siassi. Congratulations!

Our service fees are as follows;
* Registration of Business Names - K250
* Incorporation of a Company - K650
* Registration of Associations - K250
* Other entities Registration - K200

Contact us if you wish to register one of the above.

Augustine Wezz Kasi FYI

Again, we are happy to announce the successful incorporation of JACQUINOT BAY INVESTMENT LIMITED owned by Stanley and Dorothy Gogorea of Pomio.

Yesterday Loyal Associates had successfully registered Green Snail Building Maintenance Services, a Business Name owned by Gibson S. Twain from Manus.

Step 4. APPOINTMENT OF A PUBLIC OFFICER.

Notice of Appointment of a Public Officer has to be lodged at the office of the Registrar of Companies within 14 days after the incorporation of the Association. This is form 6 in the Regulation.

Other documents that may be lodged are:
1. Application for Change of Name
2. Notice of Special Resolution
3. Amalgamation of Incorporated Associations.

Step 3. APPLICATION FOR INCORPORATION OF AN ASSOCIATION (Form 2).

After the time for lodgement of Objections has expired, the applicant then lodges:
1. A form 2 ( Application for Incorporation)
2. A copy of the publication of notice with
3. A statutory declaration, and
4. Registration fee, in this case our service fee of K200 inclusive of IPA fee.

An application for Incorporation under s.6(2) of the Act must specify:
1. The name of the Association
2. The objects and purpose of the Association
3. The place or places where the Association was formed and carried on, and
4. The full name, address and occupation of the applicant.

Under s.6(3) of the Act, an application must be accompanied by a Statutory Declaration made by the applicant declaring:
1. That he/she is authorized by the committee of the Association to apply for incorporation of the Association under the Act
2. That on a date and in a newspaper specified in the declaration, notice was given under s.2 of the intention to apply for the incorporation of the Association, and
3. That the particulars contained in the application are true.

If the documents have been correctly prepared, a Certificate of incorporation will be issued by the Registrar.

Step 4, next......

Step 2. PUBLICATION OF THE NOTICE OF INTENTION.

The next step is publication if the Notice of Intention is approved. After publication of the notice in the press by the applicant, there is a period of one month when objections may be sent to the Registrar.

A Notice of Objection under s.4(2) of the Act must include:
1. The grounds of the Objection, and
2. The name, address and occupation of the person by whom the objection is made.

Upon receipt of a Notice of Objection the Registrar will give the applicant for Incorporation a written notification of the Objection and specify a time within the applicant for Incorporation may make representation to the Registrar in relation to the objection.

Step 3, next......

Today I'll discuss what basically is an Association and the steps to incorporating it.

So, what is an Association?
An Association is a not-for-profit organization formed by a group of people with a common interest (such as sporting club, women's group, church bodies, youth groups and non-government or organizations in general). - IPA PNG -

STEPS TO INCORPORATION

Step 1. Notice of Intention To Apply For The Incorporation of an Association.

Under s.2 of the Association Act (the "Act"), a form 1 (Notice of Intention) and a copy of proposed Constitution or Rules, is to be lodged at the office of the Registrar of Companies or using the IPA online registration system through one of their many agents, like Loyal Associates.

The Notice of Intention must:
1. Be in the prescribed form
2. Give details of the prescribed qualifications for Incorporation of an Association
3. Be submitted to and approved by the Registrar publication
4. Contain the name and address of the person by whom it is given, and
5. Contain such particulars as the Registrar directs.

The Constitution must comply with s.16(2) of the Act and s.8 of the Association Incorporation Regulation (the "Regulation").

Step 2, next.......

We are registering Business Names, Companies, Associations and other IPA services. If you'd like to register your business now, do not hesitate, talk to us so we could assist you.